Team 3 - Presentation Slides
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TEAM 3Consumerism & Consumer
Protection
Kyle DealMelisa GrzanichDianne MillerMike MyersMike Shumack
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Focus on Ford-Firestone Tire Crisis
Introduction to Consumer Protection Bridgestone/Firestone Ford Motor Company NHTSA Involvement Consumer Advocate Agencies Who’s protecting the Consumer?
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Who is responsible?
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Consumer Protection
Who helps protect the Consumer?
There are over 50 Consumer Protection Agencies
and hundreds of Consumer Advocacy groups– EPA– FDA– NHTSA– CPSC– SEC– FDIC
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Four Legal Theories
Negligence
Manufactures have an obligation to do what a
reasonable person would be expected to do.
They can be held liable for injury resulting from
unintentional but reasonably foreseeable misuse
of a product.
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Legal Theories
WarrantyWhen a product is sold there is an implied warranty that the product is fit for the ordinary use for which it was intended.
Express - explicit claim made by manufacturer to seller
Implied - item fit to use as is intended for
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Legal Theories
Strict LiabilityMakes it possible for injured consumers to hold all those in the chain of distribution responsible for defective products
Joint-and-Several LiabilityIf the primary party responsible for damages or If the primary party responsible for damages or injury can not make full restitution, the injury can not make full restitution, the secondary parties will be required to do so.secondary parties will be required to do so.
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Firestone: Key Facts
May 2000 Firestone under federal investigation
August 2000 Recall 6.5 million tires
November 2000 Firestone internal investigation of
Decatur, IL plant
March 2001 Bridgestone President Yoichiro Kaizaki
resigns
August 2001 First trial for Firestone
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What did Firestone Know?
Employee concerns
1999 two safety studies conducted
Results of studies not released
Profit vs. Safety?
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Compensation
By August 2001 Firestone settles 150+ cases for undisclosed sums
August 2001 Dr. Joel Rodriguez and family lawsuit – $6 million settlement
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Casualty Statistics
December 2000– 148 deaths– 525 injuries
August 2001– 203 deaths– 700 injuries
Final Numbers– 271 deaths– 800+ injuries
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Ford Motor Company
Firestone puts onus on Ford
Ford profits take big toll
Court hearings begin
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Ford Motor Company
Florida Death Toll rises
Consumer lawyers watching Texas
Firestone exposed
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Ford: Key Dates
Sept 2000: Ford Motor Company insists blameless in fatal accidents.
Jan 2001: Ford offers tire warranties on new car sales
March 2001: Ford releases annual report listing damages
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Ford: Key Dates (continued)
May 2001: Relationship with Firestone terminated
May 2001: Ford recalls Firestone tires
Aug 2001: Firestone agrees to pay damages for first trial
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Ford Motor Company
Ford hides defects
Jury finds Explorer defective
Ford ends tire replacement program
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National Highway Traffic Safety Administration
NHTSA formed 1970
Purpose - to reduce
deaths, injuries, and
economic losses
resulting from motor
vehicle accidents
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NHTSA Involvement
NHSTA notified of tire trends 1998
NHTSA recommends additional recalls
May 2001: Ford recalls an additional 13 million
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NHTSA Responses
NHTSA creates the TREAD Act of 2000
New performance standards for tires
Increased financial penalties
Tire pressure monitoring devices
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Consumer Advocacy Organizations
Center for Auto Safety– Consumer Union & Ralph Nader
autosafety.org
Successes– Lemon Laws– Ford Pinto recall– Firestone 500 tire recall
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Center for Auto Safety
May 2000 warned NHTSA of trend
Nylon cap $1 part
Sues Firestone/Ford – recall all ATX, ATX II & Wilderness tire
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Center for Auto Safety
Basis of Law Suit
– Breach of express warranties– Breach of implied warranties– Reckless, intentional or negligent
misrepresentation
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Warranties
Express warranty– explicit claim made by manufacturer to seller
Implied warranty– fit for the ordinary use to which it is intended
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Basis for lawsuit
1999 recall in foreign countries
Non-Decatur production sites
Promote Explorer as safe vehicle
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Public Citizen
Ralph Nader, 1971– citizen.org
Goals– consumer safety from all products & services
Successes– Creation of NHTSA
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Public Citizen
Concerned about SUV rollovers– 1995 to1997 2D Explorer
Worst rollover death rate Worst death rate overall
NHTSA vehicle stability ratings– Initially available on internet
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Push for New Federal Safety Rules
Revised tire safety standard
Dynamic roof crush standard
Dynamic rollover standard
Ejection prevention standard
Increase early notification of defects
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Tread Act Ineffective
Special interest lobbying
– Lacks criminal penalty legislation– Secrecy provisions to withhold data from public– Lack of information on used vehicles
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Tire Pressure Monitoring
Direct v Indirect monitoring– Direct – monitors all 4 tires– Indirect – measures difference in rotation
speed
New regulation gives manufacturers choice– Automakers provide direct monitor as upgrade
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Who’s Protecting the Consumer?
Where did Firestone fail to serve the consumer?– Employee concerns– Failure to act on study results
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Who’s Protecting the Consumer?
Where did Ford go wrong?– Vehicle design v. tire design– Hid lawsuit information
What did Ford do right?– Voluntary tire replacement– New vehicle tire warranties
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Who’s Protecting the Consumer?
What could NHTSA have done better?– Prompt reaction to initial reports– Does Tread Act go far enough?
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What are Consumer Responsibilities?
Maintain vehicles according to manufacturer specifications– measure pressure
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Sources
http:\\autosafety.org http:\\citizen.org http:\\elslaw.com http:\\ford.com http:\\nhtsa.dot.gov http:\\msnbc.com http:\\safetyforum.com
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Sources
http:\\statefarm.com http:\\usatoday.com Business, Government & Society, 9th ed.,
Steiner, George and John F. Steiner; McGraw-Hill, 2000, pp 560-573.