Transportation Bill Doubles Auto Recall Fines to $35 Million
08-01-2012
Under a new compromised transportation bill, auto manufacturers may face maximum fines of up to $35 million should they fail to effectively execute a safety recall.
The penalty increase comes in response to poorly implemented recalls that have led several car manufacturers, such as BMW, Toyota and, more recently Volvo, to pay millions in fines to the U.S. National Highway Traffic Safety Administration (NHTSA).
While this is far less than the $250 million initially sought by the Senate, will it be enough to persuade the auto industry to thoroughly examine their recall plans to enhance execution and notification initiatives?
It may be too soon to tell.
Some critics of the new penalty argue that the increase in fines will not have a large impact on auto manufacturers as they are so infrequently levied. Others, such as the presidents and CEOs of auto trade associations including the Alliance of Automobile Manufacturers and Global Automakers, support the revised bill and believe that car makers will remain committed to improving motor vehicle safety.
Set to take affect within one year, the compromised bill also calls for the development of a system that will allow vehicle owners to type their VIN number into a NHTSA online database and access pertinent recall information. The legislation also authorizes the U.S. Department of Transportation to permit automakers to notify affected owners of recalls by email or telephone – rather than just relying on U.S. mail.
Within a year, new cars will also have to include a decal in the glove compartment or another place that includes a toll-free number for drivers to call and submit vehicle safety complaints to NHTSA. It is possible that such a provision could lead to a surge of safety complaints and subsequently more agency investigations.
The federal government and NHTSA are continuing to show that they are serious about cracking down and improving motor vehicle safety. Those within the auto industry should consider reviewing their recall plans to ensure all procedures are in compliance in the event of a recall. Such adaption to the ever-changing regulatory landscape can effectively limit substantial problems that may occur in the future, and in turn protect a company’s brand and bottom line.
What do you think of this legislation and the increased penalties for non-compliance? Will the uptick in penalties effectively improve automakers’ response to safety recalls? We welcome your comments below.
Stericycle ExpertRECALL™ is the industry leader in recall logistics and regulatory compliance for consumer product, pharmaceutical, medical device, juvenile product, and food and beverage recalls. ExpertRECALL’s professionals are experts in recall management who can help you streamline the entire product recall process.
