Company penalized by Consumer Products Safety Commission for slow reporting of defect

Distributor pays more than $500,000 to settle complaint that it violated requirement to immediately report such defects.
July 22, 2009

A New York City distributor has agreed to pay a more than $500,000 to settle a complaint that it was slow in reporting a defect and fire hazard linked to oscillating fans.

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The $587,500 penalty is part of a settlement Haier America Trading LLC reached with the Consumer Product Safety Commission (CPSC). The agency announced that the settlement resolves CPSC staff allegations that the company knowingly failed to immediately report to the agency that the fan posed a risk of fire.

Manufacturers, distributors, and retailers are required by law to immediately report defects that could create safety hazards.

The Oscillating Tower Fan, model FTM140GG, poses a fire hazard because repeated bending of the fan’s wires during oscillation causes the wires to break, CPSC said.

The agency said Haier America, which distributed the product, received about 14 reports of incidents involving the fans from May to October 2004, including reports of fires and one report of injuries. The company finally reported the problem in December 2004, after the agency asked the company to do so, said CPSC.

CPSC spokesman Scott Wolfson wouldn’t comment on exactly why the announcement of a settlement came years later. But he said it’s a situation where the agency put all of its resources into first recalling the product. "In the aftermath (of a recall), we begin to work up our legal case," he said. "It can take time to negotiate a settlement."

CPSC said, in agreeing to the settlement, the company denies the agency’s allegations.

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– Edited by David Greenfield , editorial director
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