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Child Safety Seat Maker Graco Fined $10 Million

March 20, 2015
Personal Finance
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Graco Children’s Products, makers of child-safety seats for vehicles, will pay at least $10 million for failing to report defects in nearly 6 million car seats in a timely manner.

The company must pay a $3 million fine to the federal government, and will owe another $7 million if it doesn’t spend at least that much to improve child safety features over the next five years, according to the National Highway Traffic Safety Administration.

According to the administration, which began investigating Graco last year, the seats in question had buckles that could stick in a latched position, potentially putting children at risk in emergency situations.

The issue led to what would become the largest child-safety seat recall ever. The administration’s investigation focused on whether Graco failed to report the problem promptly enough.

“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,” U.S. Secretary of Transportation Anthony Foxx said in a written statement. “Today’s action reinforces that responsibility in a way that will make our kids safer for decades to come.”

Federal law requires a manufacturer to notify the NHTSA within five business days of when it knows, or “should reasonably know,” that there’s a problem with a piece of motor vehicle equipment like a child seat. In a consent order issued Friday, Graco admitted not providing the required notice.

The company ultimately recalled more than 4 million convertible and booster seats in February 2014 and nearly 2 million more in June.

Graco President Laurel Hurd said in a statement to media that the company regretted not meeting the NHTSA’s expectations for reporting the problem.

“We accept this fine and the additional funding requested by NHTSA for a joint venture involving child passenger safety initiatives in the future,” Hurd said.

Under terms of the order, Graco will create new plans for child safety, including looking at ways to increase the effectiveness of car seat registration. Registering seats allows parents to be notified of defects. Graco also may launch a child-safety awareness campaign with the money, or work to identify safety trends impacting the entire car seat industry.

Doug Gross is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @doug_gross and on Google+.

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