Haier America to Pay more than $500,000 Civil Penalty

The Consumer Product Safety Commission (CPSC) recently announced that Haier America Trading LLC, of New York City, has agreed to pay a civil penalty of $587,500 to settle allegations that the appliance manufacturer failed to inform CPSC of a defect and fire hazard in the company's Oscillating Tower Fan, model FTM140GG.

The penalty settlement, which has been provisionally accepted by the commission, resolves CPSC staff allegations that Haier America knowingly failed to report to CPSC immediately, as required by federal law, that the fan posed a risk of fire. Repeated bending of the fan's wires during oscillation caused the wires to break, resulting in a fire hazard.

From May 2004 to October 2004, Haier America received as many as 14 reports of incidents involving the fans, including some fires and one report of injuries. During that time, Haier America conducted testing and other analysis. Haier America finally reported to CPSC in December 2004, only after CPSC asked the company to report. In November 2005, Haier America and CPSC announced a recall of the fans.

Federal law requires manufacturers, distributors, and retailers to report to CPSC immediately (within 24 hours) after obtaining information reasonably supporting the conclusion that a product contains a defect which could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or violates any consumer product safety rule or any other rule, regulation, standard, or ban enforced by CPSC.

"Prompt reporting in this case could have prevented fires and injuries," said Inez Tenenbaum, CPSC chairman. "Companies have a responsibility to immediately let us know of potential hazards, and we will hold them to their duty."

In agreeing to the settlement, Haier America denies CPSC's allegations.

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