As 2018 comes to a close, the American Association for Justice (AAJ) has released their annual “awards” for the worst corporate conduct of 2018. This annual report highlights some of the most egregious acts of corporate greed by misleading and taking advantage of consumers in an effort to maximize profits. The report also demonstrates how these companies will continue their often-predatory practices unless they are healed accountable by our justice system. AAJ is an incredible, non-profit organization aimed at protecting the rights of consumers while ensuring equal and fair access to our courts.
Given the current political climate, Washington seems unlikely to put people’s needs ahead of corporate wishes. Therefore, our civil courts are often the only way for Americans to hold bad actors accountable and change the way they do business. Here in Chicago, we are proud to represent and fight for people, not corporations and are equally proud of our successes against some of the very companies identified in the AAJ report. We have sumarized some of the most disappointing conduct in the AAJ report below:
State Farm: Illinois company State Farm was forced to settle a lawsuit for $250 million dollars after the FBI uncovered the ultimate backroom scheme aimed at overturning a $1.06 billion dollar verdict against the insurance company. The verdict found that State Farm “instructed auto repair shops to fix its policyholders’ cars with lower quality aftermarket parts instead of original automaker-branded parts.”
Rather than accepting the perfectly legal judgment, State Farm secretly funneled more than four million dollars to an Illinois Supreme Court candidate, Lloyd Karmeier, who later cast the deciding vote overturning the verdict. The FBI uncovered numerous instances of mail and wire fraud used to hide the campaign contributions which accounted for more the 90% of all money donated to Karmeier. After years of litigation, State Farm settled this Racketeer Influenced and Corrupt Organizations Act (RICO) lawsuit for $250 million dollars on the eve of trial.
Naviant: Naviant is a for-profit company that services federal student loans. The company accounts for more than 21% of all student loans and is the third largest lender in the country. AAJ notes that Naviant also has more than three times the number of complaints regarding its conduct than its competitors.
Examples of the company’s alleged deceitful conduct include: putting borrowers into loan forbearance plans that accumulate more interest instead of informing the consumer that more affordable repayment plans were available; placing students in repayment plans that void their eligibility for public service loan forgiveness; not allowing co-signers to be released from loans even when eligible, and; suing “families of deceased borrowers despite promises such loans would be forgiven (Navient also charged interest on such efforts).”
Initially, the Consumer Financial Protection Bureau took strong steps to stop these abuses. However, the Trump administration has intervened and stopped many of these enforcement actions. This means that private individuals must bring their own actions to prevent Naviant’s practices from continuing. Additionally, many states, including Illinois, have filed lawsuits against the company challenging these deceptive practices.
General Motors/Takeda: Once the subject of a 2016 post on this very blog, AAJ identifies numerous continual problems with the automaker’s exploding airbag scandal. The report notes that more than 20 million, about 7% of all vehicles on the road, still have faulty Takeda airbags installed. Additionally, more than four million airbags that were previously replaced need to be re-installed again because the problem was not fixed. And millions of more vehicles were placed under recall in 2018 for a problem first identified by Takeda more than ten years ago!
These faulty airbags, alleged to deploy without warning, have been linked to numerous deaths and hundreds of injuries. Equally concerning, AAJ’s report notes that a recent lawsuit alleges that GM knew of these problems as the late 1990’s. GM continues to fight having to recall these airbags and, “in a filing with the Securities and Exchange Commission (SEC), GM admitted that it would save “approximately $1 billion” if it did not have to repair the defective air bags.”
If you are worried about your vehicle, you can enter your car’s VIN number into safercar.gov to see if it is subject to one of the recalls.
You can review the entire AAJ report here. AAJ concludes their report by arguing that corporate accountability is not a threat to corporate profits. The companies identified in the report represent more than one trillion dollars in annual profits. We have laws and regulations in place to protect consumers from many of the deceptive practices alleged above and in the report. We all hope the world’s largest and most successful corporations will do their part by simply doing the right thing. But, as AAJ makes clear, it is also our responsibility to fight to make sure these laws are enforced and that people are safe from harmful products or illegal profit schemes.