Peloton Settles Treadmill Recall Incident And Violation With $19.1M Penalty

Benzinga · 01/06/2023 12:20
  • Peloton Interactive, Inc (NASDAQ:PTON) agreed to pay a $19.1 million civil penalty to the U.S. Consumer Product Safety Commission (CPSC).
  • The settlement resolved CPSC’s charges that Peloton purposely failed to immediately report to CPSC regarding its Tread+ treadmill defect that could create a substantial product hazard and create an unreasonable risk of serious injury to consumers. 
  • The civil penalty also settled charges that Peloton knowingly distributed recalled treadmills violating the Consumer Product Safety Act (CPSA).
  • Beginning in December 2018 and 2019, Peloton received reports of incidents associated with pull under and entrapment in the rear of the treadmills. 
  • By the time Peloton filed a report with the Commission, there were more than 150 reports of people, pets, and objects, including the death of a child and 13 injuries. 
  • Peloton and the Commission jointly announced the recall of the Tread+ treadmill on May 5, 2021.
  • Staff also charged that after the public recall, Peloton knowingly distributed in commerce 38 Tread+ recalled treadmills using Peloton personnel and through third-party delivery firms.
  • The settlement agreement requires Peloton to maintain an enhanced compliance program and internal controls and procedures system to ensure compliance with the CPSA. 
  • Peloton has also agreed to file, for a period of five years, annual reports regarding its compliance program and system of internal controls.
  • Peloton held $938.5 million in cash and equivalents as of September 30, 2022.
  • Price action: PTON shares traded lower by 0.93% at $8.50 in the premarket session on the last check Friday.