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Team 3 - Presentation Slides


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Team 3 - Presentation Slides

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