05/17/2018

Photo (c) GummyBone - Getty Images When a driver in southern California noticed that his three-year-old Prius was losing power as he cruised down the Interstate 5 highway, with warning lights illuminating on the dashboard and his gas pedal suddenly failing, he knew his only hope to avoid a crash was to pull off to the shoulder.

But the shoulder was under construction. With nowhere to go, his car stalled completely in the far-right lane.

For a minute or so, the driver sat in traffic as cars traveling 60 miles per hour swerved to avoid him. Then, in his rearview mirror, he saw one pair of headlights grow closer. They were not swerving or slowing down. He braced himself.

Most people consider it to be a scary and unsafe experience when their cars die on the road, as the owner of a 2012 Toyota Prius recounted happening to him in a report he later filed to the California Highway Patrol and Toyota.

Both the Prius owner and the woman who rear-ended him walked away from the crash in late 2015 without serious injuries, but the Prius owner later submitted his police report and correspondence with Toyota to federal regulators at the National Highway Traffic Safety and Administration (NHTSA).

He expressed his concern that this apparent defect in the Prius could have turned out much differently. (This driver’s identity is not known because NHTSA redacts the names of all consumers who submit complaints and supporting documentation to their website.)

For Toyota, however, the fact that some of their Priuses can lose power in a moment’s notice is not a secret, and it is not even considered a problem. Instead, Toyota characterizes this as a safety feature, or a “failsafe mode,” to use the company’s terminology. When a part called the inverter in the Toyota Prius malfunctions, the car goes into this mode before it dies completely.

“The failsafe modes incorporated into the Prius are designed to allow the vehicle to be driven at a reduced speed for limited distances to help move the vehicle out of traffic and come to a safe stop,” Toyota’s press team told ConsumerAffairs in a prepared statement.

Toyota dealer sues

But drivers who are unable to pull over in time would likely disagree with that assertion. And a Toyota dealer says that nothing about Toyota’s so-called “failsafe mode” is safe.

“Somehow, this has been twisted where they want people to believe that that portion of it is safe,” Roger Hogan, owner of Claremont Toyota and Capistrano Toyota dealerships in southern California, tells ConsumerAffairs in an interview. “Failsafe is not safe and that seems to be some misnomer that's floating around there all of a sudden.”

In reality, Toyota is simply trying to avoid the expense of recalling and properly fixing cars that should not be on the road, Hogan charges in a $100 million federal lawsuit that he has filed against Toyota.

The case, which was originally filed last year in federal court, alleges a pattern of Toyota failing to fix safety defects in its cars in order to keep costs down.

According to Hogan’s complaint, Toyota has been notifying dealers about several serious safety issues in cars via informal “service campaigns” and “technical service bulletins” rather than recalls that car companies are required by law to issue if a defect is considered dangerous.

Hogan says that Toyota’s so-called “technical service bulletins” are known as “Toyota’s Secret Bulletins” because dealers are instructed not to inform drivers about the problem unless someone brings their car in with a complaint.

More recently, Hogan has made local headlines for his own efforts to address the practice by refusing to sell about 70 Priuses that he says are prone to suddenly dying on the road because of defective inverters. “I will not allow my family to drive one of these cars,” Hogan tells ConsumerAffairs.

Non-recalls becoming more common

It’s highly unusual for a car dealer to sue his own boss or to refuse to sell an estimated $1,000,000 worth of inventory, but the practice of car companies downplaying safety defects with “bulletins” and “service campaigns” is an old public relations stunt that is growing more common, industry experts say.

“You call something anything other than a recall, that immediately signals to the consumer this is not something that is about safety,” Jason Levine, the Executive Director of the Center for Auto Safety, tells ConsumerAffairs.

In recent years, Levine says that the industry appears to have grown bolder with the practice. “We're seeing more of it,” he says. “It’s an old practice that is continuing to be used by manufacturers and arguably has increased under an administration that is less likely to be opening investigations.”

The problem may also be compounded by underfunded regulatory watchdog agencies, and, according to the car industry’s own research, an underinvestment in manufacturing quality over the past decade.

Gas leaks in Ford Explorers

When people who drove Ford Explorers said that exhaust fumes from the car seemed to be leaking into the passenger cabin, causing health symptoms consistent with carbon monoxide poisonings, Ford Motor Company initially only warned car dealers about the problem.

“Some 2011-2015 Explorer vehicles may exhibit an exhaust odor in the vehicle... Customers may indicate the odor smells like sulfur,” the company wrote to its dealerships in 2014, advising them to offer free repairs to customers with complaints.

In the following years, as police officers across the country described falling unconscious and crashing their Explorers while driving, Ford Motor Company eventually blamed the police agencies themselves for the poisoning, saying that modifications that agencies had made to the Explorers had caused leaks in their fleets.

"What we found was that the police had modified these vehicles after they left the Ford factory,” Ford has repeatedly said while simultaneously offering to fix the leaks.

Not until late 2017 did Ford Motor Company publicly extend the same repair offer to civilian motorists. But even then, Ford framed it as a psychological issue rather than a legitimate safety concern.

“Ford is aware that some 2011-2017 Explorer owners have concerns about exhaust or carbon monoxide,” the company wrote in a public notice to consumers and dealers at the end of 2017.

“These vehicles are safe,” Ford added in its customer service bulletin. “However, for our customers’ peace of mind, Ford is offering this no charge service that reduces the potential for exhaust to enter the vehicle."

A reckless decision

Levine says this notice from Ford is incredibly reckless because it “signals to consumers that this is not a problem, despite the fact that carbon monoxide is a silent killer. It literally kills thousands of people every year.”

In the case of the Ford Explorer, several high-profile lawsuits describe debilitating injuries and neurological damage caused by long-term carbon monoxide exposure or resulting car crashes.

Levine’s group, which has counted 1,300 consumer complaints to NHTSA about carbon monoxide poisoning in the Ford Explorer, has repeatedly asked Ford to issue a formal recall.

Levine casts doubt on the company's claim that police modifications caused the carbon monoxide leaks, noting that civilians also complained about the fumes and that police have modified their own vehicles for years without reporting similar problems.

“We don’t think there’s any truth to that,” Levine said about the claims.

In a statement to ConsumerAffairs, the Ford press team only repeated the company’s earlier talking abouts about the issue.

“Ford’s investigation and extensive testing did not find carbon monoxide levels that exceed what people are exposed to everyday,” the team said, adding that consumers can take their Fords in “for a free service designed to reduce the concern.”

Nissan and Chrysler follow suit

In recent years, similar tactics have been deployed by Nissan and Chrysler, consumer groups charge. After hundreds of consumers complained about a loss of braking power in their 2009 Muranos, Nissan customers were invited to have the problem repaired in a so-called “customer satisfaction campaign.” NHTSA has since opened an investigation into the issue.

In a separate case, Chrysler initially refused to recall older Jeep models that were prone to fiery explosions when they were rear-ended, a defect linked to 70 deaths.

Chrysler eventually agreed to recall a portion of the cars in 2013 but invited other car owners with the problem to take part in a voluntary “customer service campaign.”

Slow recall process and alleged sabotage

In 2009 and 2010, Toyota became the center of one of the worst scandals in the automotive industry’s history when it faced a record-breaking recall, lawsuits, and a Department of Justice investigation into unintended acceleration complaints.

During that time, Roger Hogan was the president of the Southern Toyota Dealers Association, and he remembers that dealers seemed to be caught off guard by an onslaught of recalls.

“We were being bombarded with one recall after another, after another,” he tells ConsumerAffairs.

By law, manufacturers are required to send paper notices to the original car owners letting them know if their vehicle is under recall. But Hogan says that process was fraught with missed opportunities and miscommunication.

“Many people on second or third owner vehicles aren't doing business at Toyota dealerships, so they had no chance whatsoever to be informed about these dangerous conditions," he explains.

What’s more, when Toyota drivers brought their cars into the dealership, Hogan says that the database that dealers used to check a car’s recall status was slow and difficult to use.

Due to a combination of the factors, “the recall response rates were abysmal,” Hogan says.

To address the shortcoming, Hogan went to work designing a software “patch” that allowed his employees to more effectively gather recall information on every car in their service area and to find the current owners of defective vehicles.

Using the new software, Hogan said that Claremont Toyota identified thousands of recalls that had previously been missed. Nationwide, that translated into “some very significant safety issues that were being unaddressed for millions of customers in the United States.”

Hogan began marketing and selling the software he called Autovation to other dealers and invited Toyota’s corporate office to take a look in 2011. In a sales pitch, Hogan says he demonstrated to executives how the program worked and offered to sell it “for pennies on the dollar.”

Toyota got back to him one week later saying that it wasn’t interested. "We're very disappointed in you,” he remembers the company telling him, “for thinking our concerns for customer safety are as not as high as they are.”

Hogan continued to use Autovation at his own dealership until 2015, when he says that Toyota locked him out of the computer system in an attempt to sabotage his business.

“Toyota did not want Autovation to succeed because it would cost Toyota more money,” Hogan charged in the federal lawsuit he filed shortly after.

Software fix for inverters?

Toyota has agreed to recall an estimated 800,000 Prius cars that stall due to burnt-out inverters. But Hogan and consumers say that the Priuses are still dying on the road, even after undergoing repairs.

The problem, as Hogan alleges in his lawsuit against Toyota and in a petition to federal regulators, is that Toyota is not addressing the root of the problem -- the inverter itself. Instead, Toyota says that the problem can be fixed with a software adjustment in the car’s computer.

A software fix costs corporate about $80 per car, Hogan says, far less than the estimated $2,000 cost of a new inverter. He is now refusing to sell Prius cars from the model year 2010 to 2014 that have the problem until Toyota agrees to replace the part.

In a statement, Toyota responds that Hogan is only pursuing the faulty inverter issue to advance his ongoing $100 million lawsuit against the company, which Toyota dismisses as being born from a professional grudge.

“As with any component, inverters may fail over time depending on any number of conditions and variables,” Toyota’s press team says, adding that “the 2014 Prius inverter recall was implemented to enhance vehicle safety.”

Still, Toyota continues to insist that most cars experiencing the problem will go into a supposed “failsafe mode” as they stall out. Hogan says that dealers have another name for it: “limp home mode” or “unintended deceleration.”

"But it doesn't sound as attractive as failsafe,” he adds, “like you're really protected.”

NHTSA and Toyota are now both monitoring inverter failures on Prius cars, with one Los Angeles Times report finding that 800 Prius drivers reported their vehicles stalling out even after undergoing the recall repair.