Graco Car Seat Punishment Not as Big as It Seems
Chris Welsh, Esq.
Graco Children’s Products is in hot water with U.S. Transportation for its responsibility (or lack thereof) in the largest ever recall of child seats.
Graco sold 4 million car seats that were eventually recalled for trapping children (in one case, a grown man had to use channel pliers to get his two year old daughter out). Graco has been fined by the National Highway Traffic Safety Administration (“NHTSA”) for dragging its feet to notify parents and safety authorities about the defective buckle. The NHTSA fined the children’s product manufacturer a potential $10 million for its negligence: the corporation must pay $3 million to the federal government immediately, and an additional $7 million over the next five
years unless they invest the same amount to improve child safety.
Usually, punitive fines against negligent manufacturers are a big problem. Why? Manufacturers have the potential to make hundreds of millions of dollars from a single style of a product. Consider that Graco’s least expensive car seat costs $90. Times that by the 4 million recalled, you have a revenue of roughly $360 million…for one type of car seat. In this scenario, $10 million is merely a drop in a bucket. Corporations can afford, and even anticipate, such fines as a necessary cost of business.
The caveat in this case is that NHTSA threatens to fine $7 million unless Graco invests as much in child safety. This is a positive step, but Graco, a maker of child safety seats, should be investing in child safety in the first place. And $7 million for $360 in profit? A penny in their pocket. A more positive step would be to impose a much larger “fine-or-invest” sum of money. In other words, a number in proportion to the massive profit they are making. Otherwise, safety fines as forced “investment” just get swept into the cost-benefit algorithm of manufacturers. It is hard to say how far $7 million will go and what Graco will improve with it. Still, here is to hoping that Graco takes this punishment seriously and cleans up its act.