Federal Regulators Hand Honda $70 Million Penalty for Unfiled Early Warning Reports

January 09, 2015

Honda is starting off the New Year with a $70 million civil penalty as a result of a federal investigation.

The National Highway Traffic Safety Administration (NHTSA) issued the automaker two $35 million fines for failing to report deaths, injuries and certain warranty claims to the federal government as required by law.

Federal law requires that car manufactures to submit Early Warning Reports of potential safety concerns to the NHTSA on a quarterly basis. The reports are intended to help car makers and federal regulators spot patterns that could result in a recall.

Along with certain warranty claims and customer complaints, more than 1,700 death and injury claims went unreported to the NHTSA between 2003 and 2014. Honda announced the failure to report in November 2014 after an independent audit of its records during a federal investigation. The company blamed data entry and software programming errors for the oversight.

The unfiled Early Warning Reports contain information about dangerous defects in Takata airbags that have killed at least five people worldwide and injured thousands of others. During the 11-year period, almost 2,900 claims were made involving death or injury, but Honda only reported to the NHTSA claims that had been denied. The remaining 1,700 were paid and counted as warranty claims.

As part of the settlement, Honda has agreed to increased NHTSA oversight and third party audits.

Honda may be the first automaker to be handed a civil penalty in 2015, but last year was a big year for the NHTSA, having issued more than $126 million in fines.

Ferrari and Volvo were slapped with fines totaling $3.5 million and $1.5 million, respectively, for either failing to submit early warning reports or for filing them in an untimely manner.

General Motors took home the biggest fine, $35 million, in May for delaying a recall for vehicles that were affected by a defective ignition switch.

The fines are limited by a $35 million cap, but NHTSA officials are asking Congress to increase the limit to $300 million.

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