The Consumer Product Safety Commission (“CPSC”) recently entered into a $15,450,000 settlement agreement with Gree, a manufacturer and importer of dehumidifiers produced in China.
The penalty was against three affiliated companies, located in China, Hong Kong and the United States. Gree is alleged to have imported and sold 2.5 million defective dehumidifiers for which the Company received reports of smoking, sparking, and fires resulting in significant property damage.
This is the highest civil penalty assessed by the CPSC to date and is the largest penalty that can be assessed under the Consumer Product Safety Improvement Act of 2008. In justifying the penalty amount, the CPSC cited several violations, alleging that Gree:
- knowingly failed to immediately notify the CPSC that the dehumidifiers were defective and created an unreasonable risk of serious injury or death (it appears that Gree did not notify the CPSC until approximately 9 months after they started to receive reports of the defective dehumidifiers);
- knowingly distributed and sold dehumidifiers bearing the UL safety certification mark which were not compliant with UL standards;
- knowingly made material misrepresentations to the CPSC concerning the UL certification.
This settlement underscores the shift in CPSC’s policy regarding their intention to assess significant penalties on a going-forward basis. It is also a strong reminder to manufacturers, importers, distributors and retailers of consumer products of the importance to promptly assess whether there is a reporting obligation under the Consumer Product Safety Act.
Please feel free to contact David J. Evan or Jamie L. Maguire to discuss how your business would benefit from an internal product safety compliance program in order to avoid these types of violations.
