On January 5, 2023, the U.S. Consumer Product Safety Commission (the “Commission” or “CPSC”) announced a $19,065,000 civil penalty agreement in connection with its settlement of certain claims against Peloton Interactive Inc. (“Peloton”). According to the Commission’s Press Release, Peloton received “reports of incidents and injuries associated with pull under and entrapment in the rear of its treadmills” beginning in December 2018 and continuing into 2019. Despite possessing this information, Peloton did not immediately report to the Commission that its product contained a defect that could create a substantial product hazard and created an unreasonable risk of serious injury to consumers, as is required by Section 15(b) of the Consumer Product Safety Act (“CPSA”). Indeed, by the time Peloton eventually filed its report with the Commission, there were more than 150 reports of people, pets and/or objects being pulled under the rear of the Tread+ treadmill, including the death of a six-year-old child and 13 injuries, including broken bones, lacerations, abrasions, and friction burns. 

Peloton’s eventual decision to recall the Tread+ treadmill was prompted by a unilateral press release published by the Commission on April 17, 2021, which warned consumers to stop using the product “after multiple incidents of small children and a pet being injured beneath the machines.” It was only thereafter that Peloton and the Commission jointly announced the recall of the Tread+ treadmill on May 5, 2021; Peloton later extended the time for consumers to receive a refund in connection with the recall for one additional year.

The civil penalty was based in part on Peloton’s alleged knowing failure to timely report to the Commission. The Commission additionally alleged that Peloton knowingly distributed 38 Tread+ recalled treadmills using Peloton personnel and through third-party delivery firms. In other words, the $19,065,000 civil penalty amount, which is larger than the maximum civil penalty allowed by law for a related series of violations, is premised on two separate charges: (1) that Peloton knowingly failed to immediately report to CPSC, as required by law, that its Tread+ treadmill contained a defect that could create a substantial product hazard and created an unreasonable risk of serious injury to consumers; and (2) that Peloton knowingly distributed recalled treadmills in violation of the CPSA. 

In a separate statement about the Commission’s announcement, Commission Chair Alexander Hoehn-Saric stated that the settlement agreement with Peloton, including the over $19 million civil penalty and a requirement that Peloton maintain an “enhanced” in-house compliance program, was unanimously approved by the Commission. Commissioner Richard Trumka also published a statement, describing the agreement as “one of the largest civil penalties in our history.” The CPSC’s announcement is the first civil penalty announced in 2023 and is consistent with the Commission’s recent ramping up of enforcement activity, including 5 civil penalties in 2022 that together totaled $38 million. 

Finally, and although criminal penalties have not been assessed against Peloton as of yet, Commissioners Richard Trumka and Mary T. Boyle both indicated in separate statements that in future cases, the Commission will continue to use all “tools” available at its disposal to it to enforce the law. The Commissioners’ statements make clear that Peloton is the latest in a series of more aggressive enforcement actions by the Commission, which shows no indication of slowing.

The Commission’s press release can be viewed here.

The civil penalty and settlement agreement can be viewed here.