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Automakers face steeper recall fines

Proposed highway bill attempts to strengthen vehicle safety, but advocates say it isn't enough
Wednesday, October 14, 2015 - 07:00
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Proposed highway bill attempts to strengthen vehicle safety, but advocates say it isn't enough

As both Chrysler Fiat and General Motors received record fines for violating federal safety laws related to vehicle recalls, the U.S. Congress wrangled over safety-related language in a proposed comprehensive transportation bill.

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During the summer, the National Highway Traffic Safety Administration (NHTSA) announced it imposed an unprecedented $105 million civil penalty for Fiat Chrysler's three violations of federal safety laws. In September, GM announced it would pay a $900 million fine to settle a federal criminal probe into its failure to recall vehicles equipped with defective ignition switches – a flaw that led to hundreds of deaths and injuries, and prompted one of the largest vehicle recalls in history. 

GM executives in that case will avoid potential criminal charges, the type of charges that are at the heart of a dispute over several amendments to the proposed highway bill.

It's been 10 years since Congress passed a comprehensive highway bill, and as the current authorization for the Highway Trust Fund was set to run out Oct. 29, legislators looked no closer to passing more than a short-term, stop-gap measure. In July, the Senate passed its version of the bill, the DRIVE Act, minus several provisions that would have imposed criminal penalties on auto executives, boosted fines, and prevented dealerships from selling vehicles with open recall notices.

Those changes irked safety advocates, even as it looked unlikely that the House would move forward with the legislation.

“Consumers expect that when there is a major safety problem, their political leaders will be on their side to address it and mitigate risk," said Jack Gillis, director of public affairs for the Consumer Federation of America. "The Senate bill gets a failing grade for protecting corporate misbehavior and malfeasance over consumer safety. The bill requires rental car companies to repair vehicles under recall for defects but not families who buy from a used car dealer. Nearly three out of four car buyers purchase a used vehicle and the Senate did not close a loophole that allows used car dealers to sell unrepaired recalled vehicles. This is unacceptable and offers second rate safety protections to the millions of consumers who choose to buy, or can only afford, a second hand car.”

The Senate's six-year, $47 billion funding bill included language that doubled the maximum fines for delayed auto recalls to $70 million (up from $35 million). The bill also prohibits the rental of vehicles under recall, and incentivizes crash avoidance technology by requiring that crash avoidance information be indicated on new car stickers

The bill calls for NHTSA to improve the website and the consumer complaint filing processes. Dealers will be required to inform consumers of open recalls during service appointments. The bill would also create a state pilot grant to inform consumers about open recalls.

The Obama administration had suggested upping the cap on fines to $300 million per delayed recall, while others had called for the complete removal of caps.

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