Peloton couldn’t run away from the consequences of corporate mis-management forever. The fitness equipment and media company has agreed to pay a $US19 ($AU28.15) million penalty in a civil case settlement with the Consumer Products Safety Commission.
Previously, the commission had charged Peloton with knowingly distributing a recalled device and ignoring device defects in its Tread+ treadmill that could “could create a substantial product hazard and created an unreasonable risk of serious injury,” said the CPSC in a press statement. Thursday’s settlement resolves those charges.
Peloton’s Tread+ treadmill was linked with the death of a 6-year old child in March 2021. A subsequent CPSC report determined that the machines were also involved in numerous other severe injuries among pets, children, and adults — largely related to body parts being pulled under the treadmill’s belt. The CPSC issued an urgent warning to consumers in April 2021 that Peloton’s Tread+ treadmill posed a “serious risk” to the safety of children and pets, and urged the company to recall the fitness device. But the company fought back, refusing to recall its equipment and claiming the issue was one of misuse, not the machines themselves.
That is, until it couldn’t argue with the federal regulator anymore. “When a company continues to sell dangerous products that they know can cause serious injury or death, it must be held accountable,” wrote CPSC Chair, Alexander Hoehn-Saric in a Thursday statement.
The commission initially found that Peloton had received 72 incident reports from its treadmill users. And on Thursday, the watchdog revealed the company had knowledge of more than 150 reports of people, pets, or objects being pulled under the machines — at least 13 involving significant injuries like broken bones and friction burns.
Peloton issued voluntary recalls of both its Tread+ and cheaper Tread treadmills in May 2021. The Tread+ recall was related to danger posed by the high slatted belt and lack of guardrail, unique to the machine’s design, according to the CPSC. While the Tread recall, issued before the device even formally launched in the U.S., had to do with touchscreen displays detaching and falling while in use.
As part of the recall agreement, the fitness brand agreed to stop selling and distributing the treadmills in the U.S., and to offer full refunds to customers who wanted to return their machines. For customers who preferred to keep their equipment, Peloton issued a software update to lock the Tread+ with a passcode (a “fix” that came with its own complications), and offered to relocate customers’ treadmills to pet and child-free rooms at no cost.
Though the company’s response was too little, too late for the CPSC. The commission alleged that Peloton’s delayed actions constituted a failure to timely report to the regulator. The CPSC also claimed that Peloton violated the Consumer Products Safety Act by continuing to distribute the Tread+ treadmills up until August 2021, months after the May recall.
The $US19 ($AU28.15) million fine the company now has to pay to settle those charges is another financial hit on top of months of difficulty for Peloton. Though it re-introduced a version of its Tread device in November 2021, the Tread+ remains off the market. In January 2022, internal documents revealed that the company was careening towards financial ruin amid the recalls and the declining popularity of covid-era at-home fitness as people returned to offices and gyms. In response, it raised subscription prices, enacted mass layoffs, and exited manufacturing — outsourcing its production to Taiwanese company, Rexon.
In a statement sent to Gizmodo, Peloton said it was pleased to have reached this settlement and said it “remains deeply committed to the safety and well-being of our members and to the continuous improvement of our products.” The spokesperson went on to say the company “continues to pursue the CPSC’s approval of a Tread+ rear guard that would further augment its safety features.”
Even if the company manages to outlast the turbulence though, it still won’t be done with the federal regulator. According to the settlement, Peloton has to comply with additional CPSC terms, like maintaining “an enhanced compliance program” and upping its internal safety testing. The company will also have to file annual reports on its product safety and compliance for the next five years.