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Hyundai to Pay $17M Fine for Failure to Report Brake Defect

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The National Trial LawyersThe National Highway Traffic Safety Administration (NHTSA) announced that Hyundai has agreed to pay a $17.35 million civil penalty and comply with NHTSA oversight requirements outlined in a consent order because it failed to promptly report a safety-related defect.

The defect affecting 2009-2012 Hyundai Genesis cars involves corrosion in critical brake system components that can result in reduced braking effectiveness and increase the risk of a crash.

“Safety is our top priority, and all automakers should understand that there is no excuse for failing to report a safety-related defect, as required by law,” said U.S. Transportation Secretary Anthony Foxx. “This Administration will act aggressively and hold automakers accountable when they put the American public at risk.”

What Hyundai didn’t tell

NHTSA found that Hyundai had been aware in 2012 that brake fluids used in the model year 2009-2012 Hyundai Genesis did not sufficiently inhibit corrosion in key components of the vehicle’s brake system. Rather than issue a recall, Hyundai instructed dealers to change the brake fluid in affected vehicles without explaining the consequences of failing to change the brake fluid. Hyundai also did not inform Genesis owners of the potential safety consequences.

Hyundai finally issued a recall of the affected vehicles in October 2013 as a result of a NHTSA investigation.

While there have been no fatalities because of the safety defect, six consumers reported collisions, including two reports of injuries. As of January 14, 2014, Hyundai had received 87 consumer complaints with regard to Genesis vehicles, most of which suggest increased difficulty in braking.

“Federal law requires automakers to report safety-related defects to NHTSA within five days, and neither NHTSA nor the American public will accept anything less,” said NHTSA Acting Administrator David Friedman. “Hyundai failed to act to protect their customers and others that were harmed in an accident, and must change the way they deal with all safety related defects.”

As part of the consent order, Hyundai agreed to make improvements to its processes for identifying, reporting and communicating safety-related defects promptly. This includes the creation of a U.S. Technical Committee to review and make decisions regarding potential Hyundai-specific safety recalls. Hyundai will ultimately be responsible for responding to safety concerns in a timely manner based on the Technical Committee’s recommendations.

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