A China-based manufacturer and its subsidiary companies have agreed to pay a $15.45 million penalty to settle charges that they knowingly failed to report to the U.S. Product Safety Commission (CPSC) defective room dehumidifiers that posed an unreasonable risk of injury to consumers.
According to the CPSC, the companies, Gree Electrical Appliances of Zhuhai, China, Hong Kong Gree Electrical Appliances Sales of Hong Kong, and Gree USA Sales of City of Industry, CA, failed to promptly report to the CPSC known defects with 13 different brands of dehumidifiers, including Frigidare, GE, Gree, Kenmore and Soleus Air. The defects caused the machines to overheat and catch fire, causing an estimated $4.5 million in property damage. More than 2.5 million defective dehumidifiers were the subject of product recalls in September 2013, January 2014 and May 2014.
In addition to failing to report the defect to the CPSC as required under federal law, the companies allegedly sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards. Company officials also allegedly made misrepresentations to CPSC staff during its investigation.
As part of its settlement with the CPSC, the companies have also agreed to implement a program to ensure future compliance with the provisions of the U.S. Consumer Product Safety Act (CPSA), as well as a related system of internal controls and procedures.