Fact Sheet: “In September 2014, Honda commissioned a third-party audit of its TREAD Act reporting (also known as Early Warning Reports, or EWRs) to the National Highway Traffic Safety Administration (NHTSA) after certain discrepancies in reporting had been identified.

NHTSA Special Order

Once Honda received preliminary findings from the third-party audit, it requested a meeting with NHTSA, and on October 17, 2014 briefed NHTSA on the matter. On November 3, 2014, NHTSA issued a Special Order to Honda requesting information related to Honda’s EWRs, and Honda submitted responsive information to NHTSA on November 24, 2014.

TREAD Act Requirements

The heart of the TREAD Act is an Early Warning Reporting obligation, which requires vehicle manufacturers on a quarterly basis to report a wide variety of information that could indicate a potential safety defect. This information includes a report on any death or injury incident that is known to Honda from a written claim or a written notice containing any allegations that injury or death may have been caused by or related to a possible defect. These claims are received by manufacturers from customers, their representatives or other sources. Death and Injury EWRs to NHTSA are required to include certain specified information about the incidents. Oral claims and notices of death or injury do not carry the same reporting requirements. The TREAD Act also requires manufacturers to provide aggregate information about warranty claims it has paid, property damage claims (regardless of whether paid or denied), customer complaints (oral and written) and field reports. Certain field reports are required to be provided in hard copy, as well. For complete details on the TREAD Act, please visit the NHTSA website.

Key Findings of Honda’s Third-Party Audit

Honda’s third-party audit has identified that it did not report to NHTSA a total of 1729 written claims or notices concerning injuries or deaths over the period of July 1, 2003, through June 30, 2014. Our review to date indicates that these were inadvertent data entry and computer programming errors. Additionally, the audit found a delay between the time that Honda first became aware of possible discrepancies in its TREAD reporting and the full investigation and reporting of the issue. More detailed background regarding these issues follows:

1. Data Entry Errors: In entering injury and death claims into the company’s database Honda often did not enter a date in the “written claim received” field. The computer program used to generate Honda’s Early Warning Reports requires completion of that field in order to distinguish reportable written claims and notices from non-reportable oral claims for relief. Therefore, those written claims and notices that were input without a “written claim received” date were automatically omitted from Honda’s Early Warning Reports.
2. Coding Error: Early Warning Reports are required to identify the particular component involved in the injury or death claims being reported using a series of NHTSA component codes. Historically, Honda maintained a more exhaustive series of its own component/defect sub-codes to track incoming claims. However, the EWR computer program was not set up properly at the outset, and did not properly map all of Honda’s internal sub-codes to a NHTSA code. Therefore, when generating its Early Warning Reports, Honda’s computer program included only those written injury and death claims or notices that mapped to a NHTSA component code – thus underreporting claims.
3. Narrow Regulatory Interpretation: Honda used an overly narrow interpretation of what constituted a “written notice” under the TREAD Act. Using this narrow interpretation, Honda did not consider third-party documentation that the company obtained through its associates or consultants as reportable. For example, police reports obtained by Honda or information from private investigators hired by the company, were not considered a “notice received by the manufacturer” – and thus did not trigger an EWR report.”