Once the darling of the fitness industry, Peloton has been inundated with one problem after another over the past couple of years. Even 2023 did not get off to a great start after the Consumer Products Safety Commission (CPSC) fined the New York-based exercise equipment company a hefty sum of $19 million for failing to promptly report treadmill hazards and for distributing recalled treadmills.
The Commission called it “one of the largest civil penalties in our history”. The Peloton fine, approved by a vote of 4-0, is the second largest issued by the CPSC. In 2018, it had slapped a $27.5 million fine on Polaris Industries for failing to report defective off-road vehicles.
The market reacted by dragging down the stock even further. Peloton had touched a price of $162.24 on 24 December 2020 as the pandemic lockdown turned into a windfall with people trying to turn their homes into makeshift gyms, but on Thursday, it closed at $8.58, down 2.94 percent.
According to the commission, Peloton received reports of injuries associated with individuals being pulled under and trapped in the rear of its Tread+ treadmills towards the beginning of 2019. Peloton did not immediately report the injuries to the commission. It eventually resulted in 13 injuries, including the death of a six-year-old child.
“By the time Peloton filed a report with the Commission there were more than 150 reports of people, pets, and/or objects being pulled under the rear of the Tread+ treadmill,” according to the commission.
In May 2021, Peloton recalled about 125,000 of Tread+, but only after a bitter battle with the commission. It led to a rare situation when the CPSC had to issue its own warning to the public to stop using the machines.
John Foley, then CEO of Peloton, later admitted: “We made a mistake in our response. We should’ve engaged more productively with them from the outset. For that, I apologise.”
The civil penalty also settles charges that Peloton distributed recalled treadmills in violation of the Consumer Product Safety Act.
Alexander Hoehn-Saric, chair of the safety commission, said in a statement: “By acting with one voice, the CPSC sends a loud and clear warning to companies who continue to sell dangerous products that they know can cause serious injury or death. By failing to report these incidents to the Commission immediately, Peloton not only violated the Consumer Product Safety Act, but also consumers’ trust.”
Company spokesperson Ben Boyd said in a statement: “Peloton remains deeply committed to the safety and well-being of our members and to the continuous improvement of our products. It continues to pursue the CPSC’s approval of a Tread+ rear guard that would further augment its safety features”.
Follow us on
