LG Gets $1.825 Million Penalty for Failure to Report Defective Dehumidifiers

LG Electronics Tianjin Appliance Co., Ltd., and LG Electronics USA Inc. (LG), agreed to pay a maximum $1,825,000 civil penalty, according to the Consumer Product Safety Commission (CPSC). 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, about 795,000 under the Kenmore brand.

Fires caused by the defective dehumidifiers resulted in millions of dollars of property damage, says CPSC.

The problem, according to CPSC, is a defective fan, which causes the dehumidifiers to overheat, smoke, melt and/or catch fire. This poses a burn and smoke inhalation risk 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. LG allegedly failed to do this.

Starting in 2003, the company started getting reports of dehumidifiers catching fire and causing extensive property damage to consumers’ homes.  By the time the dehumidifiers were recalled in 2012 (9 years after the first reports), LG was aware of 107 reports of incidents, with more than $7 million in property damage and three reports of smoke inhalation.

The recalled products were sold exclusively at Sears and Kmart stores nationwide and Sears.com and Kmart.com from 2003 to 2009 (note that they stopped selling them 3 years before the recall).

The model numbers recalled included: 35-pint (2004) – 580.54351400; 50-pint (2003) – 580.53509300; 70-pint (2003) – 580.53701300; 70-pint (2004) – 580.54701400; and 70-pint (2005) – 580.54701500.

The Kenmore logo was on the front top of each unit, and, as noted above, they were manufactured between 2003 and 2005. Note that manufacturing stopped 7 years before the recall.

The recall was announced again by Sears in 2013.

Smoke inhalation is potentially fatal. In fact, more fire deaths are caused by smoke inhalation than burns, according to the National Fire Protection Association.

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; and
  • maintain a related series of internal controls and procedures.

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. So one of the commissioners voted not to accept the agreement. Does this mean one of them does not think LG should pay the meager $1.825 penalty, about $2.29 per unit sold?

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Category: Product Liability
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