Toyota Hit with Record Fine for Not Disclosing Auto Design Defect

By December 20, 2012Product Liability

Toyota, the world’s leading auto manufacturer, has agreed to a record fine of $17.4 million for not disclosing a known and potentially dangerous vehicle design defect as quickly as it should have. It’s the second time in two years that Toyota has been fined for delaying the reporting of known auto defects.

The fine is the maximum the U.S. National Highway Traffic Safety Administrator (NHTSA) can assess, indicating the serious nature of this incident and auto design defects as a whole. “Every moment of delay has the potential to lead to deaths or injuries on our nation’s highways,” said NHTSA Administrator David Strickland in news reports of the fine.

Auto Defects Were Known by Automaker for Three Years

In June 2012, Toyota’s Lexus RX 350 and RX450h models were recalled due to the possibility of their accelerator pedals getting stuck with floor mats. When this happens, the vehicles could accelerate outside of the drivers’ control.

By law, automakers are required to notify NHTSA of any safety defects five days after they become aware of the problem. In May, NHTSA contacted Toyota about the accelerator problem. The agency subsequently determined that Toyota had known of 63 pedal-interference instances in the SUVs going back to 2009. The recall of the vehicles was implemented on June 29, and by that time NHTSA had documentation of 97 such safety issues with the Toyota vehicles.

In 2010, Toyota was fined almost $50 million for three separate incidents when the company delayed its reporting on known auto defects, also related to unexpected acceleration.

Companies Don’t Always Do the Right Thing

So even after incurring significant and repeated civil penalties, Toyota did not stop its questionable practices. Unfortunately, this type of corporate behavior is not isolated to one entity. Companies of all sizes in all sorts of industries act negligently, often times resulting in deadly consequences.

But government oversight can only do so much and doesn’t always proactively abate consumer dangers. That’s why individuals – or a large group of individuals – have the right to hold the offending companies responsible via the nation’s courts.