Gree to Pay Record $15.45 Million Civil Penalty for Failure to Report Defective Dehumidifiers
The U.S. Consumer Product Safety Commission (CPSC) says that Gree Electric Appliances Inc., Gree Electric Appliances Sales Co. Ltd., and Gree USA Sales Ltd. have agreed to pay a $15.45 million civil penalty to the U.S. government. This is the largest monetary penalty ever assessed by CPSC.
The penalty settles charges that Gree: 1) knowingly failed to report a defect and unreasonable risk of serious injury to CPSC immediately (within 24 hours) with dehumidifiers sold under 13 different brand names, including Frigidaire, GE, Gree, Kenmore and Soleus Air, as required by federal law; 2) knowingly made misrepresentations to CPSC staff during its investigation; and 3) sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards.
According to CPSC, Gree's dehumidifiers had a defect that caused the machines to overheat and catch fire. Despite Gree receiving multiple reports of incidents from consumers, and despite making design changes to fix the problem, Gree failed to report the defect to CPSC immediately. Gree also failed to report the incidents or the design changes to CPSC immediately. These incidents began in July 2012 and caused nearly $4.5 million in property damage.
The dehumidifiers were eventually recalled in September 2013. The recall was expanded in January 2014, and re-announced in May 2014. CPSC says that Gree manufactured, imported and sold more than 2.5 million defective dehumidifiers nationwide.
The defective dehumidifiers were sold by AAFES, HH Gregg, Home Depot, Kmart, Lowe's, Menards, Mills Fleet Farm, Sam's Club, Sears, Walmart and other stores nationwide and in Canada, as well as online at Amazon.com and Ebay.com, from January 2005 through August 2013 for between $110 and $400 each.
In addition to paying the civil penalty, CPSC says that Gree has agreed to implement a program to ensure compliance with the Consumer Product Safety Act (CPSA) and a related system of internal controls and procedures.
Though the company agreed to the civil penalty and its conditions, Gree does not admit to any wrongdoing in this matter.