GM Will Pay $900 Million to Settle Criminal Investigation into Ignition Switches

GM Will Pay $900 Million to Settle Criminal Investigation into Ignition Switches
Image: General Motors
September 17, 2015

General Motors (GM) and federal prosecutors have finally come to an agreement after a criminal investigation into its handling of defective ignition switches.

According to Reuters, the American auto giant will pay $900 million in addition to a public admission that it misled the government and the public about the safety of its vehicles. GM had been criminally charged with scheming to conceal a deadly safety defect from its U.S. regulator, as well as wire fraud.

The ignition switch malfunction caused certain GM cars to shut off while in motion, and has been linked to 124 deaths. This could inhibit steering and braking capabilities, as well as preventing the airbags from deploying.

In addition to the steep penalty, GM will be forced to hire an independent monitor to oversee its safety practices, including its ability to fix defects and handle recalls.

Though this announcement settles the criminal charges facing the automaker, GM still has over 200 civil lawsuits filed by consumers impacted by the defect. A special victim compensation fund was established last year to handle all civil penalties GM would be forced to pay.

GM first addressed this issue with the announcement of two recalls in February 2013, according to a Fox News timeline. The initial action recalled 1.6 million cars, while the second increased the total to 2.6 million.

In May 2014, the U.S. government fined GM $35 million for failing to disclose the problems in a timely manner.

In August 2015, the attorney administering GM's compensation fund concluded that the ignition switches were responsible for 124 deaths and 275 injuries. Families impacted by fatal crashes will each receive at least $1 million.