GM, States Reach $120M Settlement Over Claims It Kept Ignition Switch Defect Under Wraps

Image courtesy of (Louis Abate)

Three years after General Motors recalled millions of cars that contained a ignition switch defect that was ultimately linked to more than 120 deaths, the carmaker is finally closing another chapter of the saga. The company will pay $120 million to resolve allegations that it failed to disclose the safety defect in a timely manner. 

The settlement puts an end to a years-long multi-state investigation that aimed to determine if GM failure to properly address the dangerous safety defect.

“Instead of prioritizing customers, General Motors turned a blind eye for years and chose to conceal the safety defects associated with several models of their vehicles,” New York Attorney General Eric Schneiderman said in a statement.

In all, 49 states and the District of Columbia will receive $120 million from GM, while the company has also agreed to complete all applicable repairs and no longer misrepresent vehicles as “safe” until they comply with federal safety standards.

Arizona was not included in the settlement, as the state had filed its own lawsuit against GM. 

According to the states’ complaint [PDF], General Motors and certain employees knew as early as 2004 that the ignition switch found in millions of vehicles contained a safety defect that could cause an airbag to fail to deploy in the event of a crash.

The states contended that General Motors Corporation (GM before its 2009 bankruptcy restructuring) knew prior to the switches going into production in 2002 that the device was “prone to movement out of the ‘run’ position, but that production was approved regardless.”

Road To Recall

Starting in 2004 and 2005, GM customers and employees began experiencing sudden stalls and engine shutoffs caused by the switch.

In late 2004, the company opened the first of six engineering inquiries into the switch; this was meant to consider changes to the device. That inquiry was closed “with no action.”

Despite this purported knowledge, the suit alleged that GM did not issue a recall of these dangerous vehicles until nearly 10 years later.

Instead, the company decided the issue wasn’t a safety concern, and continued to market the vehicles as reliable and safe, the suit claims.

Finally, beginning in Feb. 2014, GM issued seven recalls affecting nine million vehicles that contained the ignition switch defect.

The states alleged that GM’s inaction and reiteration that vehicles were safe constituted unfair and deceptive practices in violation of state consumer protection laws.

To resolve these claims, GM will no longer represent a vehicle as “safe” unless it complies with the Federal Motor Vehicle Safety standards; will only represent that certified pre-owned vehicles are safe if they do not have open safety recalls or those recalls have been addressed; and will instruct dealers that all recall repairs be made before a GM vehicle is sold in the U.S.


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