Gree Electric Appliance Inc., an appliance manufacturer based in China has agreed to pay a record high civil penalty for misleading federal regulators about fire and burn hazards in defective dehumidifiers. The U.S. Consumer Product Safety Commission (CPSC) alleges that Gree knowingly failed to report the hazard and misrepresented the product’s compliance with voluntary standards.
Gree received multiple reports of incidents where the dehumidifiers overheated and caught fire and caused millions of dollars in property damage. However, the CPSC says Gree violated federal law by not immediately reporting the defect to the CPSC and “knowingly made misrepresentations to CPSC staff during its investigation.” To make matters worse, Gree allegedly sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards.
CPSC commissioner Joseph P. Mohorovic released a statement condemning Gree’s actions.
These are serious allegations, and they have come with a serious penalty: Gree has agreed to pay $15.45 million in civil penalties, becoming the first alleged violator of our rules to reach the per-violation maximum imposed by the Consumer Product Safety Improvement Act of 2008 (CPSIA).
Approximately 2.5 million defective dehumidifiers were sold from January 2005 through August 2013. They sold under several brand names at Home Depot, Kmart, Lowe’s, Menards, Sam’s Club, Sears, Walmart and other stores nationwide and in Canada, and online at Amazon.com and Ebay.com. In addition to paying the civil penalty, Gree has agreed to implement a program to ensure compliance with the Consumer Product Safety Act and a related system of internal controls and procedures. Depite the massive penalty, Commissioner Mohorovic expressed a desire for more transparency in the future. He advised:
Without some level of candor, the only effect on the CPSC community will be a few moments’ fear and paranoia, with no lasting lessons learned. To fail to make more instructive use of the first post-CPSIA maximum penalty is a missed teachable moment, and an agency with the limited resources we have cannot afford to miss moments. I hope we can make better use of future moments.
