Honda agrees to pay $70 million fines over regular reporting lapses

Article by Christian A., on January 12, 2015

Honda has reached an agreement to pay $70 million in fines as well as submit to a more stringer oversight for its failure to tell the United States government about warranty claims and over 1,700 injuries and deaths tied to suspected flaws in its vehicles. The law required carmakers to report such matters to the government, particularly the National Highway Traffic Safety Administration.

Honda’s violations may have effectively hindered NHTSA’s ability to quickly identify vehicle defects. In a statement, US Transportation Secretary Anthony Foxx said that all carmakers, including Honda, have a safety responsibility “they must live up to.” He added that the record fines highlight the government’s tough stance against those who violate the law.

The civil penalties covered two separate fines of $35 million, the maximum penalty allowable under US law. One penalty refers to Honda’s failure to report 1,729 death and injury claims to NHTSA between 2003 and 2014. The other penalty refers to lapses on completely reporting warranty claims and repairs offered under “customer satisfaction campaigns.”

Honda’s violations surfaced last year as probes into the Takata airbag recall crisis prompted doubts on the diligence of some carmakers to report all potential product defects to the government.

In a synopsis of an internal review filed with NHTSA in November 2014, Honda said it underreported due to “inadvertent data entry or computer programming errors” that spanned 11 years.

Rick Schostek, Honda North America’s executive vice president, remarked in a recent statement that the carmaker has resolved the matter and will build on the actions Honda has taken to address its past shortcomings in early warning reporting.

In 2014, NHTSA chief counsel Kevin Vincent, issued a special order to Honda as part of a probe on whether the carmaker failed to fully report accident-related deaths and injuries as required by US. NHTSA has also asked Honda provide documents and answer questions under oath linked to the investigation. These documents include all internal communications, field reports and warranty claims as well as pre-suit legal claims, incidents and lawsuits.

Schostek had admitted to the US Congress that Honda failed to properly inform NHTSA of some crashes in which Takata airbags exploded. He likewise admitted that the carmaker failed to provide customers of the dangers that some models present.

Furthermore, Schostek admitted that Honda still has no knowledge of the extent of the issue. He also took responsibility for the carmaker’s role in the airbag crisis. He added that Honda is willing to offer loaner vehicles to those who can’t get their airbag replaced quickly due to parts shortages.

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