GE Agrees to Pay $3.5 Million Civil Penalty in Defective Products Case
The agreement resolves charges by the U.S. Consumer Product Safety Commission's staff that GE knowingly failed to report defects and an unreasonable risk of serious injury from two models of its Profile freestanding dual-fuel ranges and some models of Profile and Monogram dishwashers.
General Electric has agreed to pay a $3.5 million civil penalty to resolve charges by the U.S. Consumer Product Safety Commission's staff that GE knowingly failed to report defects and an unreasonable risk of serious injury from two models of its Profile freestanding dual-fuel ranges and some models of Profile and Monogram dishwashers.
The staff charged that the connector in the range's wire harness can overheat, posing fire and burn hazards. GE sold the ranges nationwide between June 2002 and December 2005 for $1,300 to $2,000. GE and CPSC announced in April 2009 a recall of 28,000 dual-fuel ranges; according to CPSC, GE did not report the hazards with the ranges to CPSC until February 2009, even though GE by then had received 13 reports of harness and wiring overheating in the back of the range, including five fires. GE received notice of the hazard in 2004, CPSC reported.
As for the dishwashers, CPSC staff charged that various models of Profile and Monogram dishwashers can short circuit from condensation building up on the control board, also posing fire and burn hazards. The dishwashers were sold at department and appliance stores nationwide between July 2003 and October 2010 for $750 to $1,400. Here, CPSC stated that GE did not report the hazard with the dishwashers to CPSC until September 2010, although it already had received several reports of fires caused by occurred due to overheated control panels, including a report received in 2007, and the company had paid out settlements to consumers based on these reports. In October 2010, GE and CPSC announced a recall of about 174,000 dishwashers.
Federal law requires manufacturers, distributors, and retailers to report to CPSC immediately (generally within 24 hours), after obtaining information reasonably supporting the conclusion that a product contains a defect that could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or fails to comply with any consumer product safety rule or any other rule, regulation, standard, or ban enforced by CPSC.
In addition to paying the $3.5 million civil penalty, General Electric has agreed that GE Appliances will maintain a compliance program designed to ensure compliance with Section 15(b) of the Consumer Product Safety Act and a system of internal controls and procedures that includes:
- procedures for recording, processing and reporting information regarding potential safety issues
- written standards and policies
- confidential employee reporting of compliance concerns to a senior manager
- effective communication of compliance policies and procedures, including training
- senior management responsibility for, and general board oversight of compliance
- requirements for record retention
In agreeing to pay the civil penalty, General Electric did not admit to the staff’s charges. The penalty agreement has been accepted provisionally by the commission on a 4-1 vote.