Appliance Manufacturer LG Agrees to Pay Maximum $1.825 Million Civil Penalty for Failure to Report Defective Dehumidifiers

http://www.cpsc.gov/en/Newsroom/News-Releases/2015/Appliance-Manufacturer-LG-Agrees-to-Pay-Maximum-1825-Million-Civil-Penalty-for-Failure-to-Report-Defective-Dehumidifiers/

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U.S. Consumer Product Safety Commission

Jul 22, 2015, 12:31 ET

WASHINGTON, July 22, 2015 /PRNewswire-USNewswire/ -- The U.S. Consumer Product Safety Commission (CPSC) announced today that LG Electronics Tianjin Appliance Co., Ltd., and LG Electronics USA Inc. (LG), agreed to pay a maximum $1,825,000 civil penalty. The civil penalty agreement settles CPSC staff's charges that LG knowingly failed to report to CPSC, as required by federal law, a defect and an unreasonable risk of serious injury with several models of dehumidifiers. Fires caused by the defective dehumidifiers resulted in millions of dollars of property damage.

Due to a defective fan, the dehumidifiers overheated, smoked, melted or caught fire, posing fire and burn hazards to consumers. Federal law required LG to report to CPSC immediately about a consumer product containing a defect that could create a substantial product hazard or presenting a risk of serious injury or death.

Starting in 2003, LG received dozens of reports of the dehumidifiers catching fire and causing extensive property damage to consumers' homes. By the time the dehumidifiers were recalled in 2012, LG was aware of 107 reports of incidents, with more than $7 million in property damage and three reports of smoke inhalation.

LG manufactured and imported about 795,000 of the defective dehumidifiers under the Kenmore brand name. The dehumidifiers were recalled in 2012 and the recall was reannounced in July 2013.

LG's conduct occurred before August 2009, at a time when a maximum civil penalty was $1.825 million. In addition to paying a civil penalty, LG has agreed to maintain a compliance program designed to ensure compliance with the Consumer Product Safety Act. Additionally, the Firm has agreed to maintain a related series of internal controls and procedures. The compliance program requires written standards, policies and procedures, including those designed to ensure that information that may relate to or impact CPSC compliance is conveyed effectively to personnel responsible for CPSC compliance. The compliance program also must address:

Confidential employee reporting of compliance concerns to a senior manager with authority to act;
Effective communication of compliance policies and procedures, including training;
Senior management and responsibility for, and general board oversight of, compliance; and
Requirements for record retention.

LG does not admit to CPSC staff's charges.

The penalty agreement has been accepted provisionally by the Commission by a vote of 4-1.

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SOURCE U.S. Consumer Product Safety Commission