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

Peloton Interactive, Inc 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.

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