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Government Announces $1.2 Billion Settlement with Toyota

General Motors has recently been making headlines for a scandal in which the company recalled more than one million vehicles. But GM isn't the only automaker on the hot seat these days. Last week, the U.S. government announced a $1.2 billion settlement with Toyota, in addition to filing a criminal charge against the company for intentionally misleading consumers regarding safety issues in Toyota and Lexus vehicles. According to the Justice Department, this is the largest government penalty ever to be exacted against an automaker.

This settlement comes at the end of a multi-year criminal investigation by the Justice Department that reportedly centered around the reactions of the company's officials in dealing with the unintended acceleration defect in their cars. To refresh your memory, starting in 2009, Toyota recalled more than 10 million vehicles due to accelerators that were getting stuck under faulty floormats, as well as accelerators that were just plain old defective. There were also some issues with brakes in a few of the models recalled.

Of course, the accelerator and the brake are two of the most fundamental components of any car, so needless to say, this was a very major issue. Countless accidents resulted from these defects, and many of the victims and their families -- as many as 400 separate cases -- are in settlement talks currently. Some of these cases are going to trial, and getting favorable results. Just a couple months ago, an Oklahoma jury granted a man $3 million dollars in damages to compensate him for a deadly accident in his 2005 Camry.

Of course one of the problems is that Toyota brushed their issues under the floor mat, so to say, failing to alert the general public about the problem leading to unnecessary accidents that could have been avoided with adequate disclosure. Even worse, they affirmatively claimed that they'd fixed the problems with their cars when, in fact, they had not. It's exactly what Attorney General Eric Holder described as treating "a public safety emergency as it if were a simple public relations problem."

Holder's assessment is dead-on, and it leads me to wonder whether the GM scandal will unfold similarly. When it was all said and done, Toyota ended up having to recall more than 10 million cars. So far, GM has only recalled 1.6 million, but this could easily change. When confronted with a recall, which, of course is already a PR nightmare, these automakers tend to recall the minimum number of cars humanly possible until new information comes to light that forces them to expand the recall. GM has already expanded its recall once, and I would not be surprised if it happened again.

We'll see what the Justice Department turns up on GM, but judging by the timeline in the Toyota case, it will probably be a few years yet before we know much of anything. All in all, the GM recall -- rife with misinformation and serious safety concerns -- is starting to look a lot like the case of Toyota. Hopefully, this hefty settlement will force all automakers to take a good, hard look at their products before they hit the market so we can avoid public safety crises such as these.

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