Peloton has agreed to pay a $19 million fine for failing to promptly report treadmill hazards and for distributing recalled treadmills, the Consumer Products Safety Commission said Thursday.
The fine resolves charges that the company had “knowingly failed to immediately report” to the US regulator defects with its Tread+ treadmill, it said in a statement. The civil penalty also settles charges that Peloton distributed recalled treadmills in violation of the Consumer Product Safety Act.
The commission said it had levied “one of the largest civil penalties in our history” due, in part, to the company “distributing recalled products with a lethal defect.” In May 2021, Peloton recalled about 125,000 of its Tread+ brand treadmills following the death of a 6-year-old child and dozens of other reports of injuries related to its machines.
But it had initially declined to do so despite an “urgent request” by CPSC in April. Such declines are extremely rare.
In May, then CEO John Foley said Peloton “made a mistake in our initial response to the CPSC’s request. We should’ve engage more productively with them from the outset. For that I apologize.”
The fine, according to the commission, reflected that initial refusal. Peloton had received reports of “entrapment” by its Tread+ treadmills as early as 2018, it said.
“By the time Peloton filed a 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,” according to the commission.
Peloton did not immediately respond to CNN’s request for comment.
The exercise equipment company, which had phenomenal sales growth during the height of the pandemic, has faced a myriad of problems since. The company has reacted with management changes and large staff and operations cuts.
Shares of Peloton Interactive Inc (PTON) have crashed, falling from a high of about $167 in January 2021 to about $8 in after-hours trading following the CPSC announcement.
– Chris Isidore and Jordan Valinsky also contributed to this story.