Mercedes-Benz forced to pay $12.5 million in landmark Takata airbag court ruling

Mercedes-Benz must pay a $12.5 million penalty after one of Australia’s highest courts ruled it had not communicated the severity of the Takata airbag recall effectively enough.

The Federal Court has ordered Mercedes-Benz Australia to pay the fine for "failing to use attention-capturing, high-impact language” when communicating with consumers about the compulsory recall of the potentially-deadly Takata airbags.

Mercedes admitted to breaching Australian Consumer Law (ACL) after the court heard that in conversations with 27 consumers, call centre staff described the recall as a “precaution” and that the type of airbags used had not caused any accidents, injuries or deaths – when that was not accurate.

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It’s the first time that a company has been penalised for failing to comply with a mandatory recall notice in Australia, according to the Australian Competition and Consumer Commission (ACCC).

“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,” said Delia Rickard, Deputy Chairwoman of the ACCC.

“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.”

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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.

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.

Under the recall, suppliers were required to call back and replace defective Takata airbags by December 31, 2020 and develop and implement a plan to communicate with consumers to make sure as many as possible were swapped for safer ones. The global scandal first broke in 2013, though vehicles from as far back as the 1990s were affected.

“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,” Rickard added.

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A spokesperson for Mercedes-Benz told Wheels that while it accepted the language used in the aforementioned 27 cases did not stress the seriousness of the situation, such behaviour was not deliberate, and its dedicated Takata call centre took more than 50,000 calls in total during the time it was in operation.

The luxury carmaker also said the problem stemmed from just five contractors, and all the customers they spoke to did have their vehicles recalled and inflators replaced regardless.

“Mercedes-Benz Australia is committed to ensuring the safety of its customers and takes compliance with its ACL obligations very seriously,” the spokesperson said. “We have co-operated with the ACCC in its investigation and reached an agreement to resolve the proceeding related to the Takata Airbag Recall.”

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As part of the court ruling, it was agreed Mercedes must now establish a Product Safety Compliance Program to reinforce its obligations under the ACL – including recalls.

Despite all this, Mercedes-Benz vehicles do not contain the Takata ‘Alpha’ airbags, which were those considered the higher risk within the recall, but actually use ‘Beta’ airbags – which under the notice permitted owners to continue driving their cars until the repair was carried out. To date, Takata airbags have been replaced in more than 99.5 per cent of the Mercedes-Benz vehicles involved in the recall in Australia.

However, there is a small number of owners who have not brought their vehicles in for the free replacement and the company states said people are urged to contact their authorised Mercedes-Benz retailer immediately, or call 1300 659 307 to arrange a booking.