Defective Vehicles

January 16, 2017

Deadly Airbag Company’s Execs Indicted, $1 Billion Fine Levied

by William K. Berenson

Takata’s defect has killed 11 people and injured over 100 others

Capping an extraordinary week for corporate crime busting, on Friday Takata plead guilty to fraud charges and agreed to pay a whopping $1 billion fine. And three Takata executives were criminally charged for their part in the deadly cover-up. The indictment accuses the three executives of falsifying test data that resulted in at least 11 deaths — two of whom were Texans — and over 100 injuries, many serious.

Takata airbags in 42 million vehicles sold in the U.S. from 2002 have exploded and sent deadly medal shards shooting into the car’s interior and into the driver’s or passenger’s face, neck, or chest.

Furthermore, on Wednesday six VW executives were indicted and the German company was fined a staggering $4.3 billion for lying about its emission ratings. This brings the total cost it will have to pay, including lawsuit settlements to consumers, to an astonishing $20 billion, the largest amount in history.

After eight years of coddling giant companies, the Obama Administration is certainly going out with a bang.

Since 2004, three enormous corporations in particular — General Motors, Trinity Industries, and Takata — had been producing deadly vehicles or highway guardrails. And company executives knew about the defects and covered up damning evidence, even though they could have recalled their products and saved dozens of lives.

What had been the cost? Not that much. While they were fined millions of dollars and a huge verdict was taken against Trinity Industries, they continued to make excessive profits. G.M. raked in a whopping $43 billion and earned almost $3 billion — just in its most recent quarter — yet fought tooth and nail to avoid paying its victims.

All in all, the consequences for knowingly creating seriously dangerous vehicles and roadside barriers were relatively minor. Until last week.

April 15, 2016

Airbag Kills Texas Teen – Death Count Now Up to 11 In Biggest Auto Safety Nightmare In History

by William K. Berenson

Law’s Loophole May Have Allowed Seller to Neglect Recall

17 year-old Huma Hanif is the latest victim of the Takata airbag defect. The young woman ran into a car on a Houston highway, causing the airbags to deploy. Instead of providing a cushion against the crash’s impact, the Takata airbag ruptured and sent sharp metal fragments into the car’s cabin. One piece fatally pierced Huma’s neck.

The lead investigator said the teen was not speeding and that the car sustained very little damage. Ironically, had the airbags not deployed, she would almost certainly have walked away with only minor injuries.

Huma was the 11th person — and second Texan — to die from these exploding “safety devices.”

A whopping 24 million vehicles have been recalled by almost every major manufacturer. And the Dallas Morning News reported yesterday that another 85 million inflaters that cause the deadly explosions may be defective.

As I often say, what the hell is going on out there?

March 17, 2016

Hey, Traffic Safety Regulators, Do Your Jobs

by William K. Berenson

Alarming Failure to Fix Problems Five Years After Report of Federal Agency Shortcoming

The National Highway Traffic Safety Administration (NHTSA) is tasked with developing and enforcing important safety regulations. The federal agency is expected to respond quickly and effectively to safety violations and to implement measures for increasing the safety of our roads and vehicles. Unfortunately, the federal transportation agency has fallen short of its basic function.

A 2011 internal audit found a laundry list of problems within the agency. In response, the Department of Transportation inspector general recommended a list of changes to increase the effectiveness of the NHTSA. A new report found that the agency failed to adopt many of the recommendations.

The NHTSA responded to the scathing criticism that the agency plans to enact all of the inspector general’s recommendations by June 30. I won’t hold my breath.

January 5, 2016

2015 Was Worst Year Ever For Auto Safety

by William K. Berenson

No year could possibly top 2015 for its shocking news about vehicle fraud. Repeated concealments of deadly ignition switches, airbags, and guard rails showed the world’s auto manufacturers obsessive fixation on profits at the expense of its customers’ safety. And that’s ignoring Volkswagon’s deceptive manipulation of emissions data and other fiascoes.

Here are the top three worst defective products scandals of 2015.

1. G.M. Ignition Switch Defect

Three years ago, the attorney for a victim’s parents hired an engineer to figure out why a young woman had died in a bizarre accident while driving a G.M. vehicle. The engineer discovered an ignition switch flaw GM had known about since 2000 that ignited the biggest auto recall in history.

The giant automaker not only knew about the defective ignition switch but took great pains to cover up the problem. Yet G.M. continued to deny its responsibility for more than 100 deaths and hundreds of serious injuries.

The victims already faced an uphill battle to receive verdicts and settlements they deserved. Then, in a huge blow to victims and their families, a federal bankruptcy judge ruled in April that General Motors was shielded from lawsuits involving accidents that occurred before the corporation was declared bankrupt in 2009.

The injustice of this decision was obvious. The reason victims were not able to act sooner was because of G.M.’s concealment of the facts. Many of the fatal crashes occurred after G.M. executives and engineers were well aware of the defect.

Then, in another blow, criminal charges were dropped against the corporation in a deferred prosecution deal.

Fortunately, in the final days of 2015, a federal judge rejected G.M.’s motion to dismiss its first ignition switch trial, which is scheduled later this year. But yesterday, GM promoted Mary Barra, its president who was at the center of its fraud, to CEO as a thank you gift.

September 17, 2015

Massive Fine Against GM For Ignition Defect Fraud Announced

by William K. Berenson

Deferred Prosecution Is Hardly Justice for the Crash Victims

General Motors has reached a $900 million settlement with federal prosecutors on criminal wire fraud charges. The criminal charges stem from the company’s willlful coverup of the ignition switch flaw that killed at least 124 people, injured hundreds more, and caused the largest recall in automotive history.

However, the GM deferred prosecution agreement means the company does not have to plead guilty to the charges, which was a bonus for GM officials. And the settlement falls short of the record of $1.2 billion paid by Toyota for concealing the unintended acceleration of its vehicles.

Individual Employees Go Untouched

No GM employees will face criminal charges for their part in hiding the dangerous ignition switch problems. Instead, the FBI found that “the problems stemmed from a collective failure by the automaker,” according to the New York Times.

July 15, 2015

How Can Rental Car Companies Get Away With This?

by William K. Berenson

U. S. Senate Considering Bill To Stop Them From Renting Or Selling Recalled Vehicles

The Senate is holding hearings on a law that would close the loophole on rental company recall obligations. Currently, they can legally rent or sell recalled vehicles without notifying the consumer about a defect that can cause the driver to crash. The new law would hold rental companies to the same standards as car dealers and prohibit them from putting vehicles out on the road ntil the defect is repaired. Why are these companies exempt?

The Raechel and Jacqueline Houck Safe Rental Car Act of 2015 was introduced by U.S. Senators Charles Schumer, Barbara Boxer and Claire McCaskill, and Senate Commerce Committee Ranking Member Bill Nelson and has the support of auto manufacturers, rental companies, insurance companies and consumer safety organizations.

July 6, 2015

Flooded Vehicles Are a Serious Safety Risk

by William K. Berenson

Many Water-Damaged Cars Remain on the Market

Texas experienced record rainfall last May. At least 35 people died and numerous others were injured as a result of flooding conditions in our region. Hundreds of drivers were involved in accidents or were swept away in flash floods on Texas’s treacherous roadways. Standing water presented one of the biggest problems for drivers who found their vehicles submerged when they attempted to drive through seemingly shallow water.

Unsafe conditions still linger more than a month after the waters’ receded, that of water-damaged cars. Vehicles are built to withstand heavy rain, but not to become fully submerged in water. The water can cause substantial damage to the electrical, mechanical and computerized components that affect steering, brakes, airbags and other vital functions of the car. Small, hidden components are often affected by water, so a car that looks O.K. might actually be in serious risk of an accident.

The industry-funded antifraud group National Insurance Crime Bureau estimates that between 7,000 and 10,000 insured cars in Texas sustained water damages up until early June. Although these vehicles are supposed to be taken off the roads, many are not. In fact, the National Association of Insurance Commissioners issued a consumer alert about thousands of submerged vehicles that were abandoned in Louisiana, Mississippi, Alabama, and Texas during Hurricanes Katrina and Rita that may still be on the market today.

June 23, 2015

Takata Saved Money, Killing Eight And Injuring Over 100 Drivers

by William K. Berenson

Congress Castigates Corporation – Again

The U. S. Senate Committee on Commerce, Science and Transportation released a scathing report yesterday detailing Takata’s deplorable safety practices. It cites internal emails in which executives decided to halt safety audits of its plants to save money. The committee held another hearing on Takata’s devastating corporate conduct today – the fourth time Congress has met over the air bag fiasco in the last eight months.

Takata Altered Airbag Design To Save $2.00 Per Unit

Takata began recalling millions of vehicles that contained defective airbags last year. By May that number had reached 34 million automobiles, making it the largest auto recall in history. One out of every seven vehicles in the United States is affected.

The problem arose when the company made the fateful decision to use a cheaper propellant in its airbag canisters. The new propellant was highly volatile and often exploded, sending metal shrapnel flying into the cabin of the vehicle. The flying fragments killed at least eight people and injured hundreds of others. The new propellant cost the company $2.00 less per unit.

June 22, 2015

Audit Finds NHTSA Inept At Making Our Roads and Vehicles Safe

by William K. Berenson

Agency Missed Obvious Clues of Safety Violations

The National Highway Traffic Safety Administration (NHTSA) is responsible for regulating safety in the car industry and on our roadways. But the federal government agency has repeatedly failed to do its job, according to a scathing internal audit released by the U. S. Transportation Department. The report found that the agency’s shortcomings “deter[ed] N.H.T.S.A. from successfully meeting the mandate to help prevent crashes and their attendant costs, both human and financial.”

Systemic Failings at NHTSA

The 42-page audit criticized NHTSA for not adequately screening consumer complaints and verifying automakers’ safety claims. The audit also highlights the failings in NHTSA’s processes, including not following statistical practices in its assessments of consumer complaints and auto manufacturer reports. In addition, NHTSA’s staff was undertrained and it’s management weak. When NHTSA suspected an auto manufacturer of violating the law, the agency still took no enforcement action.

The report said NHTSA conducted its safety duties on an “honor system.” In a classic fox minding the henhouse scenario, the automakers underreported deaths and injuries and mischaracterized safety incidents in the light most favorable to the corporations. NHTSA took the corporations at their word.

June 11, 2015

Enormous Damages Awarded in Guardrail Fraud Case

by William K. Berenson

Click here to watch the video.

Dallas-Based Company Plans to Appeal

A federal judge ordered Trinity Industries to pay $664.4 million in damages and fines and an additional $20 million in attorneys’ fees in a whistleblower lawsuit brought by the company’s competitor. The judgment amount includes $525 million in damages and another $138.4 million in fines.

The Dallas-based corporation continues to deny it defrauded the government and the American public when it altered its guardrail design to save money and then covered up their actions. As a result, numerous people died and were injured. Trinity Industries plans to appeal the judgment.