Interactive home exercise company Peloton has agreed to pay a $19 million fine for failing to alert federal safety regulators to problems with its treadmills that were tied to the death of a 6-year-old and at least 12 injuries, officials said.
It is one of the largest civil penalties in the Consumer Product Safety Commission’s (CPSC) history, according to a press release.
One of the hottest stocks during the COVID-19 pandemic, Peloton has since come back to earth, with its shares falling 75% in the last year.
“Peloton remains deeply committed to the safety and well-being of our members and to the continuous improvement of our products,” Peloton spokesperson Ben Boyd said in a statement.
He added that the company is “pleased to have reached this settlement agreement.”
The settlement stems from accidents that involved people being pulled under Peloton’s high-end Tread Plus treadmill, according to The Washington Post.
The company recalled its Tread Plus treadmills in May 2021, but not before fighting with regulators, which eventually led to Peloton’s then-CEO John Foley issuing an apology.
“We made a mistake in our response,” Foley said. Foley, the co-founder of the company, resigned from his role in September.
In its most recent earnings call, Peloton said it was still struggling to turn around the company, which hit a high point during the pandemic.
Peloton discovered the problem with its treadmills in 2018. Still, instead of notifying safety regulators, it relocated warning labels to the rear of its treadmills where the accidents occurred, according to the settlement.
The company did not notify the CPSC about the problems until one day after the fatal accident. By then, Peloton had become aware of more than 150 incidents of people, pets, and objects getting pulled underneath its treadmills, leading to a child’s death and multiple injuries.
Peloton also was reluctant to recall the treadmills voluntarily, prompting the CPSC to issue a statement urging the public to stop using the machines.
“When a company continues to sell dangerous products that they know can cause serious injury or death, it must be held accountable,” CPSC Chair Alexander Hoehn-Saric said in a statement.
The agency’s commissioners voted 4-0 to approve the settlement with Peloton. However, the settlement is not stopping Peloton from getting its product back on the market. The company’s spokesman said it is still trying to get the CPSC’s approval for a rear guard, per the Post.
