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Notice Could Have Saved Graco Children’s Products $10M

— March 26, 2015

Due to a failure to provide timely notice of defects in over 4 million car seats, U.S. Transportation Secretary Anthony Foxx levied a $10M fine against the company. This action closed out a NHTSA investigation that was launched in 2014. Graco was found to be in violation of the National Traffic and Motor Vehicle Safety Act. This violation triggered the largest child safety seat recall in history.

The seat buckles could stick or become stuck in the latched position, a potentially deadly defect in certain accident or emergency scenarios. Secretary Foxx said, “Parents need to know that the seats they trust to protect their children are safe, and that when there’s a problem, the manufacturer will meet its obligations to fix the defect quickly. Today’s action reinforces that responsibility in a way that will make our kids safer for decades to come.”

Graco must immediately pay $3M of the fine to the federal government. The remaining $7M only becomes due if Graco fails to spend at least that amount on steps to improve child safety over the next five years. The company must develop a plan and procedures for dealing with certain performance metrics, including increased effectiveness of consumer product registration of the safety seats. This registration is the primary means by which parents are notified of defects.

Graco is also on the hook for identifying safety trends in the car seat industry and promoting a child safety awareness campaign. These steps should dramatically increase registration of car seats and, therefore, notices of defects. Law requires vehicle registration, however, product registration is voluntary. NHTSA data shows that roughly 40% of those with recalled car seats get them repaired, whereas 75% of people with vehicle recalls get repairs.

Secretary Foxx isn’t about to let Graco slide by on just its word, though. The company has to provide independent, third-party certification that it’s met the cost requirements. Failure to comply will result in the remaining $7M of the civil penalty becoming due.

Often, companies take a less-than-vigilant approach to consumer notices. It’s not enough to merely issue a press release, especially when lives could be on the line. More extreme efforts tend to be expensive, TV ads for instance. Yet, some companies just don’t do it. In the long run, it’s more expensive to ignore this duty, though.

NHTSA Administrator Mark Rosekind said, “Today’s action uses NHTSA’s enforcement authority to not only hold a manufacturer accountable, but to keep our kids safe. It’s another example of our commitment to use every tool available to save lives on our highways, and to use those tools in an innovative and more effective way.”

If companies like Graco end up footing the bill for these “innovative and more effective” methods, I see no problem with that. One could even say I think it’s “fine”.



US National Highway Transportation Safety Administration – Contact – Gordon Trowbridge

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