If you sell a dangerous product, you may voluntarily recall it, or the federal government may issue the recall if you refuse. If you’re in this situation, a recent fine shows it pays to be honest, upfront, and take the initiative.

What Is A Recall?

As a corporate disputes lawyer can explain, a recall is a request by a producer or government agency to return a product to its place of origin. The customer may be able to replace or exchange it for another. Recalls typically involve defects that could make the product dangerous or not as good as advertised.

Usually, the agency works with the affected company to convince them to issue the recall or threaten them with additional costs if they do it themselves without the business’ cooperation.

What Does Federal Law Require?

Under the Federal Motor Vehicle Safety Act (FMSCA), an automaker has five working days to provide the Highway Traffic Safety Administration (NHTSA) with a defect report after learning a line of vehicles has a safety defect.

Ford encountered problems with recalling more than 620,000 US vehicles in September 2020. At issue was a rear-view camera that failed on several 2020 models, including the best-selling US vehicle, Ford’s F-Series pickups.

NHTSA stated Ford had warranty claims about the cameras starting in February 2020, and the issue was raised in a management committee the following May. In July, NHTSA contacted Ford about complaints it had gotten about the cameras.

A month later, the company gave the agency data on many models with high camera failure rates. Ford recalled the vehicles in September 2020, 2022, and 2024 for the same problem.

Ford Will Pay Up To $165 Million For Recall-Related Penalty

Ford Motor Co. will pay the penalty to the US government because it moved too slowly on a recall and provided inaccurate recall information, reports the Associated Press. The National NHTSA announced in November the civil penalty is the second-highest in its 54-year history.

NHTSA stated the company:

  • Didn’t recall vehicles with defective rearview cameras quickly enough
  • Failed to give them complete information, an FMSCA requirement

Ford agreed to a consent order with NHTSA, which includes paying the $65 million penalty and another $45 million to comply with the law. An additional $55 million cost is being deferred. Ford will pay a total of $110 million and may pay up to $165 million for the rearview camera problems.

Ford doesn’t admit to violating the law, but it agrees to commit to taking several actions and pay up to $165 million to resolve NHTSA’s investigation and allegations. Under the order:

  • For three years, a third party will oversee Ford’s recall performance, and the company must comply with it
  • The company must review all the recalls that took place over the past three years to ensure enough vehicles were recalled and issue new recalls if necessary
  • Ford must review and improve its recall decision-making process, including how it analyzes data to discover vehicle safety defects. Ford will also invest in technology to trace parts by vehicle identification numbers

Ford tried to make the best of a bad situation after the consent order was announced as our friends at Focus Law LA would agree. It claims to have a strong recall process and is committed to complying with federal law, but it can improve and has learned from the camera recall.

If your business may be or is involved with a product recall, discuss your legal obligations with your attorney so you can limit your exposure and liability as much as possible.

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