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November 8, 2001

Miller: Firestone to Make More Consumer Refunds and Pay Half Million to State

Bridgestone/Firestone Inc. agrees to nationwide settlement that includes over $50 million in payments to states and consumers.

DES MOINES. Attorney General Tom Miller announced today that Bridgestone/Firestone Inc. will pay Iowa over half a million dollars and make additional consumer restitution as a result of a nationwide settlement the company has reached with all fifty states. Nationwide, the company will pay $51.5 million for consumer restitution, payments to states, and consumer education.

The settlement was approved this morning by the Polk County District Court. The court order also permanently enjoins Bridgestone/Firestone from misrepresenting the safety, maintenance, use, expected life, or wear patterns of its tires. "This is a very good outcome," Miller said.

The settlement resolves allegations that the company sold defective tires and made misrepresentations in promoting the tires and during the tire replacement process. Starting in August 2000, Bridgestone/Firestone recalled millions of tires in the wake of reports that some tires failed suddenly, allegedly causing thousands of accidents and more than 250 deaths.

Miller said the overall $51.5 million in payments includes several elements: an estimated $10 million nationally for refunds to consumers who previously were denied refunds by the company; $26.5 million in monetary payments made up of $500,000 to each of the fifty states, plus the District of Columbia, Puerto Rico, and the US Virgin Islands; $10 million to the states for investigation and litigation costs; and $5 million for a national tire safety public education project.

Miller said Iowa will receive $528,000 -- the $500,000 share plus $28,000 in litigation and cost-share payments. He said the entire $528,000 total will go to the State's general fund.

"Our Consumer Protection Division provided significant help in crafting this settlement, but Iowa's actual costs were modest. This is a good example of multi-state cooperation that ends up benefitting people all over the nation," Miller said.

"One of the reasons the states pursued this is because the U.S. government cannot obtain substantial penalties in this kind of case," he said. "The $26.5 million monetary payment to the states is not strictly labeled a penalty, but it is a means for the company to make payments as a consequence of its alleged unlawful conduct under Iowa's Consumer Fraud Act and similar laws of other states. This sends a strong message that states will take action against alleged wrongdoing concerning safety defects."

Miller said Bridgestone/Firestone already has made substantial payments to Iowa consumers - almost $5.7 million of about $450 million the company has paid nationwide for consumer reimbursement and tire replacement. At that rate of about 1.3% of the total, Iowans could receive about $130,000 of the $10 million earmarked for consumer restitution in the settlement announced today. Iowans already have been reimbursed for replacement of over 65,000 tires.

Miller said the consumer reimbursement provisions of the settlement apply to persons who already have filed complaints with the state or who have been denied refunds by the company. (For example, consumers may have complained about being denied because they didn't have original receipts.)

Persons who filed complaints with Miller's office will be notified that they will receive a refund, or that their complaint has been referred to an independent arbitrator for the case who will review the claim. The arbitrator's decision is binding on the company but not on the consumer.

Persons who were denied a refund by the company will receive a letter by January 7, 2002, giving them an opportunity to request reconsideration by the company of the denial. If there is credible evidence that the consumer essentially meets each requirement of one of the refund programs, the consumer will be paid. If the company denies the claim, the consumer will be provided notice of the denial and the option to submit the claim to the independent arbitrator, at no cost to the consumer. Again, a decision by the arbitrator does not foreclose private action if the consumer wishes to pursue it.

The settlement includes a battery of injunctive provisions regulating the company's future conduct:

Bridgestone/Firestone may not misrepresent the safety or safety characteristics of any tire or tread pattern. The company may not misrepresent the characteristics, manufacturer or appropriate uses of a tire. The company must be able to substantiate with competent and reliable scientific evidence any specific claims of tire safety, performance or durability. The company may not make misrepresentations during a recall or customer satisfaction program. The company must not provide or facilitate inconsistent information to consumers about tire pressure. The company must not make misrepresentations in or retroactively change any guarantee or warranty. The company shall not misrepresent that it has given an expert all requested information. The company shall not misrepresent the expected life or wear pattern of a tire tread. The company must handle consumer complaints in a truthful, ethical and timely manner.

Under the agreement, Bridgestone/Firestone also will provide consumers with detailed safety information at the time of delivering tires, including information about proper tire maintenance, load capacity, and air pressure; proper tire repair; and warranty terms.

Bridgestone/Firestone also agreed to provide truthful sworn testimony and cooperation for the Multi-state Working Group in related investigations. The company denied any wrongdoing in agreeing to settle the matter.

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