Barra: No Compensation Fund for Victims of Economic Loss in GM Recall


  • GM CEO Mary Barra Picture

    GM CEO Mary Barra Picture

    GM CEO Mary Barra testified in another Congressional hearing on Wednesday. | June 18, 2014

Just the Facts:
  • The GM recall compensation fund will cover only crash victims and deaths, not consumers who claim economic loss, said GM CEO Mary Barra during Congressional testimony on Wednesday.
  • Barra said claims of economic loss by owners of the affected vehicles will be addressed in court.
  • GM on Wednesday said it has fixed more than 199,000 of the 2.6 million cars involved in the defective ignition-switch recall.

WASHINGTON The GM recall compensation fund will cover only crash victims and deaths, not consumers who claim economic loss, said GM CEO Mary Barra during Congressional testimony on Wednesday.

Barra said claims of economic loss by owners of the affected vehicles for perceived diminished value will be addressed in court. GM this year recalled 2.6 million Chevrolet Cobalts and other cars for defective ignition switches that could lead to the non-deployment of airbags in a crash. The automaker said 13 people died as a result of the defective part.

GM is facing more than 70 lawsuits tied to economic-loss claims.

Barra said Ken Feinberg, GM's victim compensation adviser, has a "draft protocol" finished for the compensation fund.

Details of the draft protocol, including how much money will be in the fund, were not revealed, but Barra said eligibility criteria are expected to be announced by the end of June. GM is expected to begin processing claims on August 1.

Barra said the program "is for those who lost loved ones or who suffered serious physical injury."

She said there would not be a financial cap on the compensation fund.

GM on Wednesday said it has fixed more than 199,000 of the 2.6 million cars involved in the recall.

The congressional hearing looked into GM's failure to identify a safety defect in certain ignition switches and initiate a recall in a timely manner.

Barra told the U.S. Committee on Energy and Commerce that 400,000 replacement parts have been produced and shipped to fix the affected cars. GM will ramp up production by starting another line on ignition-switch replacement parts within a week, Barra said.

GM has hired more than 100 people at its Customer Engagement Center at 1-800-222-1020 to handle recall concerns and questions.

Barra also noted that the automaker is "doing a lot on social media" to notify consumers of the recall.

"The challenge is getting the customer in for the repair," she said. "We've done research to figure out which messages would be most compelling."

She expects the repairs to be finished by October 4.

Barra singled out GM dealers for praise in her testimony.

"I can't be more proud of how our dealers are supporting the customer," she said. "We have dealers that are extending hours in service departments (to fix the recalled vehicles)."

Edmunds says: Consumers get some critical information on the GM compensation fund from GM CEO Mary Barra.

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