In early January of this year, the Consumer Product Safety Commission ("CPSC") levied a $19.065M civil penalty against a fitness company related to potentially lethal defects in its treadmill. In May, CPSC issued a $15.8M penalty against a generator manufacturer for amputation and crushing hazards posed by its portable generators. In August of 2023, an appliance manufacturer was hit with a $11.5M penalty for burn and fire hazards associated with electric cooktops. And in November of this year, another company was required to pay a $16M penalty for consumer injuries caused by hot water leaking from defective clothing steamers. Other than each of these penalties being in the eight-figures (and among the largest issued in the Agency's history) what else did they have in common? A significant portion of the penalty in each instance was due to the company's failure to timely report the product's hazard to the CPSC.      

Under the CPSC regulations, if a consumer product that is sold to the public is suspected to be a hazard, a company must report this to the Commission within 24 hours of obtaining reportable information. While this may seem simple enough to do in theory, in practice it is often extremely difficult to know whether an incident or even a series of incidents involving a product are “one-off” accidents or are due to a true product hazard. These judgments must be made quickly, often with limited information which may or may not be entirely accurate. 

In the past, companies who were in doubt tended to err on the side of not reporting to the CPSC given that doing so often meant adverse publicity and significant time and expense associated with a possible product recall. But these fines send a clear message that companies who adhere to this philosophy do so at their own peril. If, with the benefit of hindsight, the CPSC concludes the product hazard should have been reported earlier, it can mean millions of dollars in civil penalties. Indeed, the CPSC's Handbook says it all: “when in doubt, report.”