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Toyota's $1.2 billion recall settlement could be worse news for GM

$1.2 billion is bad news for Toyota, but GM’s coming recall fine could be larger

Toyota has reached an agreement related to a recall lawsuit brought by the US department of Justice related to 2009 through 2010 unintended acceleration issues in multiple Toyota and Lexus models. Attorney General Eric Holder spoke live today. In his statement he made it clear that Toyota had intentionally concealed information. Holder started by saying “Rather than promptly disclosing an correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to members of congress. And they concealed from federal regulators the extent of problems…” In its statement of facts Toyota admitted to making false statements to defend its brand. Holder also called the Toyota actions “a cover-up” and called the actions “shameful and reprehensible.” Full video of the announcement below.

Toyota will pay the $1.2 billion, the largest fine ever over a recall issue and also be forced to submit to close review by an independent monitor. Toyota will also be charged with wire fraud, but the department will set the prosecution of those charges aside and drop them if Toyota complies in full with the resolution agreed to.

Ominously, Holder said it is his statement "(It is my) hope and expectation that this resolution will serve as a model for how to approach future cases involving similarly situated companies.” General Motors is presently embroiled in a recall controversy that may involve between 15 and 30 deaths. Although the Toyota unintended acceleration issues in total may be related in some way to more than 80 deaths, this particular case settled today revolved around 5. Like the Toyota recall, the GM recall issue seems to involve an automaker that knowingly did not disclose all of the facts, and seems also to be similar in that only a limited recall was done, rather than a full recall of all affected vehicles.

This story is not meant to diffuse the responsibility that Toyota has for the case it has just settled, but by all accounts so far, the GM issue is very similar, took place at roughly the same time in history, and involved the deaths of customers.

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Toyota issues formal comments on massive economic loss settlement related to unintended acceleration (prior story on separate issue)
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Toyota wins an important unintended acceleration case

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