Mercedes to pay $12.5m for failing to comply with Takata recall

The Federal Court has ordered Mercedes-Benz Australia/Pacific Pty Ltd (Mercedes-Benz) to pay penalties of $12.5 million for failing to use attention-capturing, high-impact language when communicating with consumers about the compulsory recall of potentially deadly Takata airbags.

Mercedes admitted that it had breached the Australian Consumer Law (ACL) by failing to implement its communication and engagement plan for contacting consumers as required by the Takata Recall Notice when it communicated with some consumers about the Takata recall.

Defective Takata airbags have been associated with about 33 deaths and over 350 injuries globally. In Australia, one person died and another was seriously injured in separate incidents caused by the misdeployment of a Takata airbag.

“We believe the statements made by Mercedes-Benz staff had the potential to give the impression to consumers that the airbag replacement was less urgent than was warranted by the real risks posed by the faulty airbags,” ACCC Deputy Chair Delia Rickard said.

In conversations with 27 consumers, Mercedes-Benz call centre staff described the recall as a ‘precaution’, or said words to the effect that the type of airbags used in Mercedes vehicles had not caused any accidents, injuries or deaths in other manufacturers vehicles, when that was not accurate.

The Takata Recall Notice required vehicle manufacturers to implement a communication and engagement plan for contacting consumers and use appropriately urgent terms to maximise rates of replacements of Takata airbags.

“Given the risks of misdeployment increased over time, we were concerned about the risks of any potential for delay in having these faulty airbags replaced,” Ms Rickard said.

Under the Takata airbag recall, suppliers were required to recall and replace defective Takata airbags by 31 December 2020 and develop and implement a plan to communicate with consumers to maximise replacement of these airbags.

“The faulty Takata airbags have the potential to misdeploy and send sharp metal fragments into the vehicle cabin at high speed, which could kill or seriously injure the occupants,” Ms Rickard said.

“The faulty Takata airbags were a potentially deadly issue, and it was vital for the safety of Australian drivers and passengers that manufacturers took the risks seriously, and clearly communicated the risks to consumers.”

“This is the first time a company has been penalised for failing to comply with a mandatory recall notice. This judgment sends a strong signal that companies must comply with their product safety obligations under the ACL.”

Mercedes-Benz has also provided a court-enforceable undertaking, which has been accepted by the ACCC, to conduct a product-safety compliance program about product safety obligations, including mandatory recalls. A copy of the undertaking can be found at Mercedes-Benz Australia/Pacific Pty Ltd.

The orders follow admissions made by Mercedes-Benz and joint submissions by the ACCC and Mercedes-Benz to the Federal Court.

For further information about the cars affected by the recall, consumers can visit Product Safety Australia or contact their manufacturer to check if their vehicle is affected by the compulsory recall.

Originally published by the ACCC