Ford Explorer Voucher Settlement Hasn’t Worked

In 2007, Ford Motor Company settled with consumers in California, Connecticut, Illinois and Texas to settle allegations that its Explorers were prone to rollover accidents. Under the $500 million settlement, consumers would receive a voucher of $500 that they could claim towards the purchase of the new Explorer, or a voucher of $300 towards purchase of any other Ford, Mercury or Lincoln model. That scheme, according to Law.com, has been a complete disaster with just about 75 owners out of one million consumers, choosing to redeem the vouchers as part of their settlement.

We had discussed the outrageous settlements as soon as they had been announced on our blog. Consumers, who had paid thousands of dollars for these defective SUVs of models between 1990 and 2001, we had argued then, deserved much more than a measly $500 voucher that they could use towards the purchase of yet another vehicle that is prone to rollovers. An estimated 1 million owners were eligible for redeeming the vouchers. But the vouchers are valid for just one year each, and the time limit to apply for one ended on the April 29th 2008. According to court filings however there have been just 2267 claims for the vouchers, and of those, 1647 were approved. So far only 75 vouchers have been cashed in.

The report doesn’t specify if the vouchers were all spent on Ford Explorers or whether consumers choose to cash in on Lincolns and Mercurys instead. Even if you assume that every voucher was cashed in on the purchase of a new Ford, it means the company spent just about $37,500 on the claims. $37,500 is a fraction of the estimated $500 million that it would have cost the company if all owners had cashed in on their vouchers.

According to Clarence Ditlow, who is the executive director of the Center for Auto Safety, the low rate of voucher use is proof that these coupon settlements are rarely beneficial to consumers. Back when the settlement was announced, we had said that the settlement was unfair to consumers who were already stuck with an automobile that was prone to flipping over like a tin can while traveling at high speed or making turns. However, product liability attorneys for the plaintiffs who negotiated the settlement insist that the vouchers were the best they could do, considering the company’s precarious financial position.

Besides the vouchers, lawyers for plaintiffs also secured settlement terms under which Ford would stop touting the safety characteristics of its SUV without providing reliable scientific proof. The company, under the terms of the settlement, also agreed to provide warnings against the dangers of a rollover as well as safety information on proper cargo storage.

Ditlow sees a silver lining in the low rates of voucher use. He says it serves as proof that these coupon settlements that are frequently seen in automobile defect class action lawsuit simply aren’t beneficial to consumers.

The Reeves Law Group is a law firm with offices throughout California dedicated exclusively to the representation of personal injury victims, including victims of product liability. Please visit our website at trlglaw.com. If you desire a free consultation on a personal injury matter, please call us at (800) 644-8000 or email us.

The Reeves Law Group is not acting as legal counsel for any party in the matters discussed in this posting.