Toyota agrees to record $1.2B settlement

 

The Justice Department announced Wednesday that it had reached a record $1.2 billion settlement with Toyota Motor Corporation over a probe related to faulty acceleration in some of its vehicles.

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Officials allege Toyota defrauded customers from 2009 to 2010 by issuing misleading statements about safety issues in Lexus and Toyota vehicles, and accused the company of deceiving the public.

“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to members of Congress,” Attorney General Eric Holder said at a press conference in Washington.

“When car owners get behind the wheel, they have a right to expect that their vehicle is safe. … Toyota violated that basic compact.” 

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Under a deferred prosecution agreement, Toyota will be forced to admit it had deceived Americans about two safety problems that caused unintended acceleration when driving. 

The agreement, filed in the U.S. District Court Southern District of New York, also requires Toyota to pay a $1.2 billion fine — the largest penalty ever imposed on an automobile manufacturer.

If Toyota fulfills the agreement’s guidelines, officials say the government would defer prosecution on a wire fraud charge for three years and then seek to dismiss it.

The settlement is the result of the government’s investigation into Toyota’s actions at the time. Hundreds of state and federal lawsuits have also been launched against the company, claiming wrongful death and personal injury, and are still pending.

Investigators found Toyota had deceived both consumers in the United States as well as the National Highway Traffic Safety Administration (NHTSA).

The company claimed in the fall of 2009 that it had “addressed” the “root cause” of unintended acceleration in its vehicles. Toyota had issued a limited recall of eight models that year because of floor-mat entrapment — a dangerous scenario in which an all-weather floor mat can trap a depressed gas pedal, thereby causing the car to accelerate. 

Another problem that caused unintended acceleration was a sticky pedal problem in which a plastic material used in some cars caused the acceleration pedal to get stuck. Officials allege Toyota tried to cover up the problem. 

Toyota's vice president for communications in the U.S., Mike Michels, told The Hill five people died as a result of the unintended acceleration.

The National Highway Transportation Safety Administration concluded in a 2011 study that earlier reports claiming dozens had died could not be connected to the vehicle problems.

"NHTSA’s report concluded that all other reports of fatalities could not be attributed to sudden acceleration or were shown to be from other causes such as pedal misapplication," the NHTSA said.

According to the report, four of the five deaths happened in a car crash in San Diego in 2009. The fifth was in a separate incident confirmed by agency officials.

The announcement of the settlement comes just days after General Motors announced it has recalled more than 1.6 million vehicles over faulty ignition switches.

— This story was updated at 11:51 a.m.