Gree USA Sales, Ltd., along with its overseas affiliates, has recently agreed to pay a $15.45 million fine issued by authorities at the Consumer Product Safety Commission (CPSC) in relation to the company’s defective dehumidifiers.
According to the announcement for this penalty, Gree sold at least 2.5 million defective dehumidifiers in the U.S. from about January 2005 through August 2013. These dehumidifiers, which were first recalled in September 2013, reportedly contain defects that cause overheating, which can trigger fires.
The CPSC reportedly started receiving consumer complaints regarding these fires in July 2012. To date, the CPSC estimates that Gree’s defective dehumidifiers have caused at least $4.5 million in property damage (due to losses from home fires, etc.).
The Allegations against Gree
As CPSC officials have explained, Gree faced some very serious allegations as part of this federal investigation and case. Specifically, authorities have contended that Gree:
- Intentionally did not report the defects associated with its dehumidifiers to the CPSC, as is required by federal law – In fact, the Consumer Product Safety Act (CPSA) requires companies to report any issues that contribute to an “unreasonable risk of serious injury” to the CPSC within 24 hours of discovering them.
- Intentionally misled the public about the safety of these dehumidifiers – Specifically, Gree is accused of putting UL safety certification marks on hte packaging for these dehumidifiers despite the fact that the company allegedly knew that these dehumidifiers did not meet UL safety standards.
- Intentionally misled CPSC investigators by providing them with information known to false
- Failed to report consumers’ complaints regarding the dangerous and malfunctioning dehumidifiers to the CPSC.
A Closer Look at the Settlement & Authorities’ Reactions to It
Gree has agreed to settle this case by paying the hefty $15.45 million civil penalty, as well as by implementing a new compliance program, which will reportedly require Gree to:
- Develop internal controls, policies and procedures that will ensure compliance with all aspects of the CSPA
- Implement confidential reporting channels so that employees can report potential compliance concerns without fear of retaliation
- Conduct regular training on compliance-related matters
- Maintain records regarding compliance issues, consumer reports, employee reports and compliance training.
Gree has reportedly refused to acknowledge any fault or failures in this case.
Commenting on the case and its outcome, CPSC Commissioner Marietta S. Robinson has stated:
On March 24, 2016, the Commission approved a groundbreaking proposed $15.45 million settlement agreement with Gree … to resolve CPSC staff allegations of numerous Consumer Product Safety Act (“CPSA”) violations… I applaud our Office of General Counsel for achieving a settlement imposing the maximum civil penalty for these violations.
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