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Auckland's Mayor says he originally found out about Lime's scooter safety problem through the media.
Several people have been catapulted off the scooters by a braking fault that randomly locks up the scooter's wheels.
Lime advised Auckland Council of 155 reported irregular braking incidents that may have been caused by the unexpected locking issue, 92 of these were in Auckland. Of these, 30 resulted in injury, of which 19 were in Auckland.
The scooters will be off Auckland's streets for at least another 24 hours while the council waits for proof the fault has been fixed. Lime also said it would temporarily pull its scooters off Dunedin streets.
Phil Goff told Checkpoint the company should have alerted the council to the problem as soon as it knew there was one.
"We know what we've read in the media essentially, and that is from a couple of people that were subjected to reasonably serious injuries," Mr Goff said.
"What we discovered, not because they [Lime] informed us but originally through the media, through individuals saying 'hey we've had this problem', and a pattern emerged - where there was an inherent defect whereby the anti-crime [and] anti-theft device in the scooter can suddenly and unexpectedly come on," he said.
"If you're travelling at 20 or 30[km/h] that's going to throw you over the top of the scooter and that's going to put you at serious risk of injury or death."
He said council officials were notified over the past week, despite Lime saying they had known about it for "a few weeks".
"We should've been told as soon as Lime found out that there was a built-in defect that was causing wheels to lock unexpectedly, we should've been advised."
Mr Goff said he found it especially bad that the company downplayed the dozens of incidents and injuries caused by the defect.
"What I regard as really bad was the Asia Pacific boss saying 'look it's only 155 reported incidents and that's a 0.0086 percentage of all rides', I don't give a damn."
He said in most road safety situations, those figures would result in an immediate product recall.
"I don't think you can write off that it is only a tiny percentage when it is a defect where an unsuspecting ride can be thrown off the scooter and subject to possible injury or death."
Mr Goff said because it was an operational matter, he couldn't say whether there was any obligation in Lime's original trial contract to report such incidents in a timely manner.
"What I'm presuming is that there wasn't a tight enough set of controls that the focus was on broader safety issues, not on a product defect."
But he said regardless, the responsibility lay on Lime to report the incidents to them.
"As soon as the firm knew they had a product defect, in my view, it was incumbent on them to report that to our Auckland Transport and council officials."
Auckland Council has heard from Lime but is yet to get all the information it needs to end the temporary suspension.
Lime has agreed to provide a full update and incident reports, as well as opening itself up for an independent review.
"We have had some communication from Lime today but are yet to receive all of the information which was requested on Friday. Once we have this information, we will need at least 24 hours to assess it before making any further decisions," the council said in a statement.
It said that after decommissioning the affected scooters, it began an investigation with an independent consulting firm to find the cause.
Lime previously said they were investigating one unconfirmed incident that was caused by the excessive braking issue since an update on the glitch was rolled out.