The Department of Justice recently announced the first corporate criminal enforcement action ever brought under the Consumer Product Safety Act.
According to a DOJ press release, the U.S. subsidiary of a Chinese company pleaded guilty to a felony violation of the CPSA in connection with its failure to notify the Consumer Product Safety Commission that millions of products it sold to U.S. consumers were defective and could catch fire. The company knew that the products were defective, failed to meet applicable safety standards, and could catch fire, DOJ states, and that it had an obligation to report dangerous consumer goods to the CPSC. Nevertheless, the company continued to sell the defective items for at least another six months, delayed reporting knowledge of the fires for about six months, and did not report the defects for about nine months.
The U.S. subsidiary has been sentenced to pay a $500,000 criminal fine and the Chinese company and two other related companies entered into a deferred prosecution agreement under which they will pay a total monetary penalty of $91 million and provide restitution for any uncompensated victims of fires caused by the defective products.
For more information on these or other product safety issues, please contact Beth Ring at (212) 549-0133 or Ned Steiner at (202) 730-4970.
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