Why Honda Is Only Being Fined $70 Million For Hiding Consumer Deaths

The $70 million fine which the National Highway Traffic Safety Administration slapped on Honda this week for failing to report more than 1,700 accidents that took place since 2003 was a record, but that record may not last for long—it might be a symptom of regulators finally waking up automakers’ failures to protect consumers from dangerous technical faults that they likely knew about.

The maximum fine that the NHTSA can impose in such cases is capped at $35 million, and the sum total was actually made up of two separate fines: one for underreporting deaths and injuries, and another for underreporting warranty claims. Honda says that the discrepancies occurred due to data entry and coding errors, as well “an overly narrow interpretation” of U.S. laws on Early Warning Reports. Company representatives have claimed that the issue has been resolved and they are looking to move on.

Honda was fined under the TREAD Act of 2000, passed after the so-called Ford-Firestone scandal. The original cap of $15 million was increased twice over the years, most recently after the 2009-2010 Toyota recall of some 10 million vehicles. (Also facing criminal charges for fraud, Toyota, which at the time was fined the maximum possible $17.4 million, later agreed to a separate settlement for a whopping $1.2 billion.)

Public outcry over automakers’ faulty reporting of safety issues—and the limited penalties available to the NHTSA to deter this practice—is far from over. After GM was forced to recall some 2.59 million cars last year, the Senate is now considering lifting the cap altogether. And the NHTSA seems to be working overtime as well: Last year, it imposed some $126 million in fines on different companies—more than the combined total of the previous 42 years since it was created. Is it possible that the era when automakers could afford to cover up their negligence might finally be coming to an end?

[Photo: Flickr user WillVision]