General Motors Co has agreed to pay $120 million to resolve claims from 49 US states and the District of Columbia over faulty ignition switches, state attorneys general and the company said on Thursday.
The faulty switches allowed the key to move into the "off" position and disable airbags.
General Motors employees first knew of the problem in 2004, ten years before the recall was announced.
In 2014, GM issued seven vehicle recalls affecting more than 9 million vehicles in the U.S. The recalls involved a defective ignition switch that can cause a loss of electrical systems, including power steering and power brakes.
"Like any other business - large or small - automakers have an obligation to represent the products they sell honestly, to ensure those products are safe, and to alert consumers when they discover a product defect that threatens consumer safety", New Jersey AG Porrino said.
GM has paid compensation to the families of 124 people killed in crashes linked to the faulty switches.
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The states alleged that these actions were unfair and deceptive and that the automaker's actions violated state laws, including West Virginia's Consumer Credit and Protection Act.
The state of MI will receive just under $4.3 million in the settlement which, according to the state's attorney general will go into the state's general fund. It led to a 2014 recall of almost 2.6 million older cars.
· GM shall not represent that certified pre-owned vehicles that the company advertises are safe, have been repaired for safety issues, or have been subject to rigorous inspection, unless such vehicles are not subject to any open recalls relating to safety or have been repaired pursuant to such a recall. Despite knowing this, employees decided it was not a safety concern, delayed making recalls, and continued to market the safety and reliability of the vehicles.
Not represent that any GM auto is safe unless they have complied with Federal Motor Vehicle Safety Standards as set by the National Highway Traffic Safety Administration.
Assistant Attorneys General Brendan Flynn and Lorrie Adeyemi, head of the Consumer Protection Department, assisted the Attorney General with this matter.