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$27.25 Million Penalty for Failure to Report Defective Off-Road Vehicles

Tuesday, April 03, 2018
Sandler, Travis & Rosenberg Trade Report

The Consumer Product Safety Commission announced April 2 that a U.S. company has agreed to pay a $27.25 million civil penalty for failing to immediately report that certain of its recreational off-road vehicles contained defects that could create a substantial product hazard or created an unreasonable risk of serious injury or death. The company has also agreed to maintain an enhanced compliance program to ensure compliance with the Consumer Product Safety Act and to maintain a related system of internal controls and procedures.

The CPSC states that between December 2013 and July 2016 the company received at least 36 reports of fires associated with some of its model year 2014 recreational off-road vehicles and made two design changes to prevent their heat shields from becoming loose and falling off. The company reported the fires on these vehicles to the CPSC in July 2016 and announced a recall of 42,500 model year 2014 units in September 2016. After the recall, the company received reports of heat shields becoming loose or falling off model year 2015 vehicles, including reports of fires, but failed to immediately notify the CPSC of the defect or the risk posed by these vehicles. The CPSC and the company subsequently announced a recall of 51,000 additional units in April 2017.

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