Peloton to Pay Up: Connected Fitness Co. Hit with $19M Fine Over Tread+ Safety Issues
The Tread+’s safety issues, which have resulted in numerous injuries and even a death, were not properly disclosed to the US Consumer Product Safety Commission
Peloton has agreed to pay a $19 million fine for neglecting to immediately report a safety hazard with its Tread+ and for distributing recalled treadmills.
The U.S. Consumer Product Safety Commission, an independent federal agency created to protect American consumers from risks of injury and death, announced the settlement involving the connected fitness company.
Peloton knowingly failed to immediately report that its Tread+ contained a defect that could create a substantial product hazard and created an unreasonable risk of serious injury, the CPSC found. The at-home fitness brand was also hit with a civil penalty for distributing recalled treadmills in violation of the Consumer Product Safety Act.
While Peloton received reports of incidents and injuries involving pull under and entrapment in the rear of its Tread+ machines in December 2018 and early 2019, the at-home fitness company did not immediately report the incidents to the Commission as required by law.
Instead, there were over 150 reports of people, pets, and/or objects being pulled under the rear of the Tread+ by the time Peloton notified the Commission. The fitness machine was also linked to a child’s death and a variety of injuries, including broken bones, lacerations, abrasions, and friction burns.
On March 18, 2021, then-CEO John Foley issued a statement regarding the child’s death, reiterating safety procedures. “While we are aware of only a small handful of incidents involving the Tread+ where children have been hurt, each one is devastating to all of us at Peloton, and our hearts go out to the families involved,” Foley wrote at the time.
On May 5, 2021, Peloton and the Commission announced the recall of the Tread+.
In addition to the fine, Peloton must maintain an enhanced compliance program as well as a system of internal controls and procedures designed to ensure CPSA compliance. Peloton has also agreed to submit annual compliance program reports for a period of five years.
Peloton said in a statement that it remains committed to the safety and well-being of its members and is pleased to have reached the settlement agreement, adding that it will continue to seek CPSC approval for a rear guard for its Tread+.
While Peloton has resolved one issue, another remains. A lawsuit was recently filed, alleging that Peloton execs engaged in insider trading, stemming from the sale of PTON stock in 2021 during the Tread+ recall. According to investor Krikor Arslanian, 12 current and former Peloton executives sold nearly $500 million in stock while concealing the known safety issues. Former CEO Foley, who has since pivoted to selling rugs, is among the 12 listed in the suit.
