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October 19, 2017

General Motors to Pay Iowa $1.5 Million in $120 Million Multistate Settlement over Defective Ignition Switches

Company deceived consumers about the safety of certain GM vehicles; defect led to deaths and injuries

DES MOINES – General Motors will pay nearly $1.5 million to the State of Iowa over allegations the automaker concealed safety issues related to ignition switch-related defects in its vehicles, as part of a $120 million settlement with 49 states plus the District of Columbia.

The Iowa settlement, approved by District Court Judge David Porter, resolves a multistate investigation into GM’s failure to timely disclose known safety defects associated with unintended ignition switch-related issues in several models and model years of GM vehicles. The settlement resolves a consumer fraud lawsuit filed concurrently with the settlement agreement.

In 2014, the auto manufacturer issued seven vehicle recalls in response to unintended key-rotation-related and/or ignition-switch-related issues, which affected more than 9 million vehicles in the U.S.

The recalls involved a defective ignition switch which, under certain conditions, could move out of the “run” position to the “accessory” or “off” position. When this occurs, the driver experiences a loss of electrical systems, including power steering and power brakes. If a crash occurs while the ignition switch is in the “accessory” or “off” position, the vehicle’s safety airbags may fail to deploy, increasing the risk of serious injury or death in certain types of crashes in which the airbag was otherwise designed to deploy.

The states alleged that certain employees of GM and General Motors Corporation, which underwent Chapter 11 bankruptcy reorganization in 2009, knew as early as 2004 that the ignition switch posed a safety defect because it could cause airbag non-deployment. However, despite this knowledge, the company decided it was not a safety concern and delayed making recalls. GM continued to market the reliability and safety of its motor vehicles that were equipped with the defective ignition switch.

The states alleged that these actions were unfair and deceptive and that the automaker’s actions violated state consumer protection laws.

Under the proposed consent judgment:

  • GM shall not represent that a motor vehicle is “safe” unless the company complied with Federal Motor Vehicle Safety standards applicable to the motor vehicle at issue.
  • GM shall not represent that certified pre-owned vehicles that the company advertises are safe, have been repaired for safety issues, or have been subject to rigorous inspection, unless such vehicles are not subject to any open recalls relating to safety or have been repaired pursuant to such a recall.
  • GM must instruct its dealers that all applicable recall repairs must be completed before any GM motor vehicle sold in the U.S. and included in a recall is eligible for certification and, if there is a recall on any certified pre-owned vehicle sold in the U.S., the required repair must be completed before the vehicle is delivered to a customer.

GM’s payment to Iowa will go to the state’s consumer education and litigation fund.

In a December 2015 final report, the company’s independent compensation consultant reported offering nearly $595 million in payments for faulty ignition switch-related claims associated with 124 deaths and 275 injuries nationwide.

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