Product Liability

CPSC fines manufacturer $587,500 for failure to report product defect

The U.S. Consumer Product Safety Commission announced on Friday that Haier America Trading LLC has agreed to pay a civil penalty of $587,500 resulting from the company’s failure to inform the CPSC of a serious defect in a line of its oscillating fans.

According to the CPSC, Haier knew that its Oscillating Tower Fans, model FTM140GG, contained a wiring defect and posed a fire hazard but failed to notify the CPSC as federal law requires. When oscillating, the wires inside the fans bend repeatedly until they break, creating a potential fire hazard and risk of burn and electrical shock injuries.

The CPSC said that Haier received 14 reports of incidents of the fans catching on fire and one report of injury. Haier received the reports between May and October of 2004, at which time the company conducted testing and other analysis on the fans. The defective fans weren’t reported by Haier until December 2004 and only after the CPSC requested the reports.

The CPSC and Haier America announced a recall in November of 2005. The fans were manufactured in China and sold in retail stores nationwide from February 2004 through November 2005 for between $20 and $30.

“Prompt reporting in this case could have prevented fires and injuries,” CPSC Chairman Inez Tenenbaum said in a statement. “Companies have a responsibility to immediately let us know of potential hazards, and we will hold them to their duty.”

Federal law states that manufacturers, distributors, and retailers must report to the CPSC within 24 hours after receiving credible information that a product contains a defect that poses a substantial hazard, creates an unreasonable risk of serious injury or death, or violates any consumer product safety rule or any other rule, regulation, standard, or ban enforced by the CPSC.