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$4.25 Million Penalty for Failure to Report Defective Goods

Tuesday, November 15, 2016
Sandler, Travis & Rosenberg Trade Report

The Consumer Product Safety Commission announced Nov. 14 that a U.S. company has agreed to pay a $4.25 million civil penalty for failing to immediately report that certain of its products contained a defect that could create a substantial product hazard or created an unreasonable risk of serious injury and for knowingly misrepresenting the scope of the products that were subject to a recall. 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 August 2011 and January 2014 the company received at least 19 reports of the items breaking during normal use, resulting in serious injuries to consumers in at least 12 cases. According to a CPSC press release, the company failed to immediately notify the agency of the defect or risk as required by federal law. In addition, the company failed to identify the correct amount and distribution dates of the items that posed a hazard to consumers during the CPSC’s investigation, which necessitated the expansion of a recall of the items.

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