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Record $15.45 Million Civil Penalty for Failure to Report Defective Goods

Wednesday, March 30, 2016
Sandler, Travis & Rosenberg Trade Report

The Consumer Product Safety Commission announced March 25 that three related companies have agreed to pay a $15.45 million civil penalty to settle charges that they (a) knowingly failed to immediately (within 24 hours) report a defect and unreasonable risk of serious injury with dehumidifiers sold under 13 different brand names, (b) knowingly made misrepresentations to CPSC staff during an investigation, and (c) sold dehumidifiers bearing the UL safety certification mark knowing that they did not meet UL flammability standards. Commissioner Joe Mohorovic said the companies are “the first alleged violator of our rules to reach the per-violation maximum imposed by the Consumer Product Safety Improvement Act of 2008.”

The companies have also agreed to implement a program to ensure compliance with the Consumer Product Safety Act and a related system of internal controls and procedures. This compliance program must include 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.

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