Troubled exercise firm Peloton has agreed to pay a $19 million civil penalty for how it illegally failed to immediately report its treadmill defects to the US Consumer Product Safety Commission (CPSC).
Before the company benefited from coronavirus lockdowns, and then later saw sales drop precipitously again, Peloton treadmills featured a hazard that could cause serious injury.
In 2021, the CPSC issued an urgent warning, saying the treadmill posed "serious risks to children for abrasions, fractures, and death." The authority advised owners to stop using the machine immediately, if there were children or small pets in the home.
The concerns were over a model of treadmill that had been causing incidents from December 2018 and on in to 2019. Peloton was legally obliged to immediately inform the CPSC, but it did not do so.
It's not clear when Peloton did inform the commission, but the two companies jointly issued a recall announcement in May, 2021.
Now the CPSC has announced that it has provisionally accepted a civil penalty payment of $19,065,000 over the charge that Peloton delayed reporting. The commission voted 4-0 and the decision is pending only public comment.
The payment also settles the charge that Peloton knowingly continued distributing the treadmill in violation of the Consumer Product Safety Act (CPSA.)
In addition to the $19 million penalty, Peloton is required to maintain what is described as an "enhanced compliance program and system of internal controls and procedures designed to ensure compliance with the CPSA."
Peloton must also file annual reports about its compliance over the next five years.
As well as its treadmills, the fitness firm is known for its exercise bikes. Following the dramatic increase of exercise bikes bought for the home during lockdowns, the company later saw "significant" loss of demand.