Thanks to Arizona’s Attorney-General Tom Horne, General Motors Company (NYSE:GM), on Wednesday, 19^th November, 2014, found itself facing a lawsuit worth $3 billion based on the allegation of having sold defective vehicles. Although the automobile manufacturer has been facing a lot of flak over its decision to recall 2.6 million vehicles on a global scale, Arizona is the first state in USA to have officially filed a case under the Consumer Fraud Act of Arizona.

In his complaint filed in a Superior Court in Maricopa County, the AG has stated –

“(GM) manufactured and sold millions of vehicles that were not safe, including hundreds of thousands in Arizona, and it failed to remedy serious defects in millions of older GM-branded vehicles.”

The figure of $3 billion was arrived at considering the fact that General Motors Company (NYSE:GM) had recalled as many as 300,000 vehicles that it had sold to the state’s inhabitants over the last decade. Not only was the company aware of defects at the time of affecting the sale but also convinced consumers to buy vehicles that have been subject to a substantial depreciation over the years.

Bearing this in mind, the lawsuit has sought up to $10,000 per vehicle sold from the company. However, once the money has been recovered, the administration intends to use it to fund public services like education and development rather than handing it over to the vehicle owners.

Trouble for General Motors Company (NYSE:GM) began when news about a faulty ignition switch surfaced in March, 2014, wherein the switch was likely to slip out of its position without warning and disrupt power supply to brakes and air-bags. As a result of this, as many as 33 deaths have been reported to occur not to mention about 39 persons sustaining serious injuries. Despite these figures, General Motors defended its actions and stated that –

“It misrepresents the facts, the performance of our vehicles and our work to ensure the safety of our customers. We intend to vigorously defend ourselves.”

Reaction to this news was evident in the stock’s performance on New York Stock Exchange wherein shares of General Motors Company (NYSE:GM) closed at $31.99, showing a decline of 0.5%.

This article has been written by Vinita Basu.

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