Peloton agrees to pay $19 million fine over treadmill recall: CPSC

Peloton has agreed to pay a $19 million fine as part of a settlement over its treadmill recall, the U.S. Consumer Product Safety Commission announced Thursday.

The fitness company recalled its Tread+ and Tread treadmills in May 2021 following reports of more than a dozen injuries and the death of a child.

The settlement with the federal regulatory agency resolves the charge that "Peloton knowingly failed to immediately report to CPSC, as required by law, that its Tread+ treadmill contained a defect that could create a substantial product hazard and created an unreasonable risk of serious injury to consumers," CPSC said in a statement.

CPSC said Peloton started receiving reports of incidents and injuries with the treadmills, including entrapment in the rear, as early as December 2018 though did not immediately report to the commission.

By the time the company did file a report with CPSC, there were more than 150 reports of people, pets and objects being pulled under the rear of the Tread+ treadmill, as well as 13 injuries ranging from broken bones to friction burns, according to CPSC. A 6-year-old child also died on March 3, 2021, after being pulled under the rear of the Tread+ treadmill, CPSC said.

The penalty also settles the charge that Peloton "knowingly distributed" 38 recalled Tread+ treadmills through Peloton personnel and third-party delivery firms from May to August of 2021, in violation of the Consumer Product Safety Act, CPSC said.

CPSC accepted the $19,065,000 settlement agreement by a 4-0 vote late last month, subject to public comment, marking one of the largest civil penalties in its history, commissioners said.

"By acting with one voice, the CPSC sends a loud and clear warning to companies who continue to sell dangerous products that they know can cause serious injury or death," Commission Chair Alexander Hoehn-Saric said in a statement. "By failing to report these incidents to the Commission immediately, Peloton not only violated the Consumer Product Safety Act, but also consumers' trust."

Peloton said it was "pleased" to have reached the settlement agreement.

"Peloton remains deeply committed to the safety and well-being of our Members and to the continuous improvement of our products," the company said in a statement, adding that it looks forward to "working cooperatively with the CPSC to further enhance Member safety."

Peloton is currently pursuing the commission's approval of a Tread+ rear guard that would "further augment its safety features," the company said.

As part of the settlement agreement, Peloton must also maintain an "enhanced compliance program" regarding the Consumer Product Safety Act and filed annual reports regarding this program for five years, CPSC said.