AUTO Whistleblower Program

The Auto Whistleblower Program offers monetary awards to eligible whistleblowers who voluntarily provide original information involving a safety-related defect; noncompliance with a motor vehicle safety standard; or violation of any notification or reporting requirement. The reported violation must be one that is likely to cause serious physical injury or unreasonable risk of death.

The National Highway Traffic Safety Administration (NHTSA), which is part of the Department of Transportation, is responsible for promulgating the rules as well as the administration of the Auto Whistleblower Program.

In order to be eligible for an award, a whistleblower must provide “original information” which the Motor Vehicle Safety Whistleblower Act defines as information that is:

Derived from a person’s independent knowledge or analysis;
Not known to the NHTSA from any other source (unless the whistleblower is the original source of the information); and
Not based exclusively on an allegation made in a judicial or an administrative proceeding; a governmental report, audit, or investigation; or from the news media (unless the individual is a source of the information).

History of Auto Whistleblower Law

In November 2014, the Thune-Nelson bill was introduced in the Senate to provide reward incentives to auto industry whistleblowers. Only a few days before introduction of the bill, NHTSA announced a nationwide recall of defective Takata airbags. The Senate Commerce Committee approved the Thune-Nelson bill in February 2015, and two months later, the bill received unanimous approval in the full Senate.

In December 2015, Congress passed the Fixing America’s Surface Transportation (FAST) Act. The FAST Act was the first long-term funding of the nation’s road system in over a decade. The Act included a number of additional measures, including an increased maximum fine of $105 million for a delayed recall. The FAST Act also incorporated the Thune-Nelson bill which eventually became known as the Motor Vehicle Safety Whistleblower Act.

The Motor Vehicle Safety Act

The Motor Vehicle Safety Act was enacted in 1966 and requires motor vehicle and equipment manufacturers to provide timely notice of a safety-related defect or compliance failure with a federal safety standard. Manufacturers must file a Defect Information Report within five days after they know, or should have known, of a potential defect that creates an unreasonable safety risk or noncompliance with a motor vehicle safety standard.

The TREAD Act

The Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act was enacted in 2000 in response to numerous deaths and injuries caused by tread separation of Firestone tires that had been installed on Ford Explorers from the mid 1990s through the early 2000s. The TREAD Act requires vehicle manufacturers to report defects, information involving accidents and injuries, and other important data to NHTSA. The TREAD Act was intended to provide NHTSA with the ability to identify safety defects and take remedial measures more quickly.

The TREAD Act is comprised of three main parts:

A requirement that auto manufacturers file a report with NHTSA whenever they conduct a safety recall;
“Early Warning” reporting requirements for defect-related information and cases where use of a manufacturer’s product results in injury or death; and
Criminal liability where a vehicle manufacturer intentionally violates the Act’s reporting requirements in cases when a safety-related defect causes death or serious bodily injury.

As adjusted for inflation in 2023, the maximum penalty for a violation of the TREAD Act is $26,315 per violation per day, and the maximum penalty for a related series of daily violations is $131,564,183.

Criminal Wire Fraud

The Department of Justice investigates and prosecutes egregious cases of deceptive statements to consumers involving auto safety issues. Past investigations and enforcement actions have been based on violations of criminal wire fraud statutes. For example, in 2014, the Justice Department brought criminal wire fraud charges against Toyota for concealing and making deceptive statements about safety issues that caused unintended acceleration in certain Toyota and Lexus vehicles. Toyota entered into a deferred prosecution agreement which required the company to pay a $1.2 billion penalty and be subject to supervision by an independent monitor to review and assess Toyota’s policies, practices and procedures regarding safety-related public statements and reporting obligations

In 2015, federal prosecutors charged General Motors with criminal wire fraud for making misleading statements and concealing information about defective ignition switches that caused the deaths of 124 people. Like Toyota, GM entered into a deferred prosecution agreement in which it agreed to pay $900 million and accept three years of oversight by an independent monitor.

The Takata Airbag Recall

Three former employees of the now-defunct airbag manufacturer provided evidence to U.S. officials that the company concealed design flaws and problems that developed during airbag testing. The whistleblowers reported that Takata manipulated reports to hide the volatility of its airbags, and that management directed employees to place rejected airbag parts back on the production line. The three whistleblowers were awarded a total of $1.7 million.

NHTSA’s investigation determined that environmental moisture, high temperatures, and age could cause the airbags to improperly inflate and even discharge shrapnel into occupants. The defective airbags resulted in 24 deaths and more than 300 injuries.

Takata agreed to plead guilty to wire fraud for providing auto manufacturers with misleading airbag test reports. The company also agreed to compensate vehicle manufacturers and pay $125 million to consumers who have been injured, or will be injured the defective airbags.

Recalls & Auto Safety Defects

According to the National Highway Traffic Safety Administration, more than 25 million vehicles were recalled last year. The tables below show the number of recalls and the number of vehicles potentially affected by manufacturer.