Gree Agrees to Pay Record $15.45 Million Civil Penalty, Improve Internal Compliance for Failure to Report Defective Dehumidifiers
WASHINGTON, March 25, 2016 /PRNewswire-USNewswire/ -- The U.S. Consumer Product Safety Commission (CPSC) announced today that Gree Electric Appliances Inc., of Zhuhai, China; Hong Kong Gree Electric Appliances Sales Co. Ltd., of Hong Kong; and Gree USA Sales Ltd., of City of Industry, Calif., have agreed to pay a $15.45 million civil penalty to the government.
The penalty settles charges that Gree:
- knowingly failed to report a defect and unreasonable risk of serious injury to CPSC immediately (within 24 hours) with dehumidifiers sold under 13 different brand names, including Frigidaire, GE, Gree, Kenmore and Soleus Air, as required by federal law;
- knowingly made misrepresentations to CPSC staff during its investigation; and
- sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards.
Gree's dehumidifiers had a defect that caused the machines to overheat and catch fire. Despite Gree receiving multiple reports of incidents, and despite making design changes to fix the problem, Gree failed to report the defect to CPSC immediately. Gree also failed to report the incidents or the design changes to CPSC immediately. These incidents began in July 2012 and caused nearly $4.5 million in property damage.
The dehumidifiers were eventually recalled in September 2013. The recall was expanded in January 2014, and reannounced in May 2014. Gree manufactured, imported and sold more than 2.5 million units nationwide. The humidifiers were sold by AAFES, HH Gregg, Home Depot, Kmart, Lowe's, Menards, Mills Fleet Farm, Sam's Club, Sears, Walmart and other stores nationwide and in Canada, and online at Amazon.com and Ebay.com, from January 2005 through August 2013 for $110 to $400.
In addition to paying the civil penalty, Gree has agreed to implement a program to ensure compliance with the Consumer Product Safety Act (CPSA) and a related system of internal controls and procedures.
The compliance program requires written standards and policies and written procedures to ensure that all information regarding the firm's compliance with the CPSA, including reports and complaints, whether an injury is referenced or not, is conveyed to the firm's responsible employees. The compliance program also must address:
- confidential employee reporting of compliance concerns to a senior manager;
- effective communication of compliance policies and procedures, including training;
- senior management responsibility for, and board oversight of, compliance; and
- requirements for record retention.
Gree does not admit to CPSC staff's charges.
The penalty agreement has been accepted provisionally by the Commission by a 4 to 1 vote.
Statement by Commissioner Joseph P. Mohorovic
Statement by Commissioner Marietta S. Robinson
About U.S. CPSC:
The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of injury or death associated with the use of thousands of types of consumer products under the agency's jurisdiction. Deaths, injuries, and property damage from consumer product incidents cost the nation more than $1 trillion annually. CPSC is committed to protecting consumers and families from products that pose a fire, electrical, chemical or mechanical hazard. CPSC's work to ensure the safety of consumer products - such as toys, cribs, power tools, cigarette lighters and household chemicals – contributed to a decline in the rate of deaths and injuries associated with consumer products over the past 40 years.
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SOURCE U.S. Consumer Product Safety Commission
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