Peloton to Pay $19M+ to Settle Reporting and Post-Recall Sales Allegations

Peloton will pay $19.065 million to settle two CPSC allegations involving Tread+ treadmills – reporting incidents late and selling 38 units after recalling. On reporting, CPSC asserted that the company knew of incidents beginning in December 2018 and that – by the time it reported in March 2021 – it knew of more than 150, including a child's death and 13 injuries.

The settlement agreement (bit.ly/3ZpBUlk) also noted CPSC's initial unilateral warning (PSL, 4/26/21). The company agreed to a recall soon after (PSL, 5/10/21).

Commissioners approved the settlement 4-0, but Commissioner Peter Feldman reiterated past concerns about having a "coherent enforcement policy," writing (bit.ly/3WTWHM3):

"Here, a maximum civil penalty was appropriate to resolve the failure-to-report claims given the number of products distributed in commerce and the fact that this matter involved the death of a six-year-old child, and other injuries…Yet, in another recent failure-to-report case that involved fatalities, a similar number of incidents, and evidence of aggravating factors, this current Commission settled claims against Vornado Air, LLC for as little as $7.5 million. That settlement, which I opposed, arguably involved worse facts than Peloton given Vornado's status as a repeat offender."

Other commissioners' comments included:

• Chairman Alexander Hoehn-Saric (bit.ly/3GcjZ8E): "When a company continues to sell dangerous products that they know can cause serious injury or death, it must be held accountable …By acting with one voice, the CPSC sends a loud and clear warning to companies who continue to sell dangerous products that they know can cause serious injury or death…This settlement demonstrates CPSC's commitment to hold companies accountable when they put the public at risk."

 

• Commissioner Mary Boyle (bit.ly/3WVr592): "Today's settlement agreement…is a significant milestone for CPSC and for the consumers we protect. Closely tracking the maximum penalty amounts permitted by statute, the settlement leaves no doubt about the Commission's dedication to robust enforcement: breaking the law has consequences…As our FY 2023 Operating Plan makes clear under an amendment I included, civil penalty assessments will continue to be an important priority for the Commission in the coming year."

 

• Commissioner Richard Trumka (bit.ly/3CqKTZx): "This vote marks a leap forward in CPSC's bipartisan plan to protect consumers by enforcing the law and deterring corporate misconduct…This is larger than the maximum civil penalty allowed by law for a single violation because Peloton committed two distinct violations by both failing to report incidents and selling recalled units…I emphasize once again that this Commission is serious about deterring corporate misconduct using every tool at our disposal, including the appropriate use of civil penalties and, where warranted, criminal referrals."

Incidents involved people, animals, and objects being pulled under the rear of the belt. Injuries included abrasions, broken bones, friction burns, and lacerations. Later in 2021(PSL, 9/6/21), Peloton acknowledged in an SEC filing that CPSC was investigating the situation.