Haier fined $587,500 for failing to report defective fan

Haier America Trading of New York City has agreed to pay a civil penalty of $587,500 to settle allegations that the appliance manufacturer failed to inform the Consumer Product Safety Commission of a defect and fire hazard in one of its oscillating tower fans that led to a recall of 150,000 fans in 2005.

From May 2004 to October 2004, Haier received as many as 14 reports of incidents involving the fans (model FTM140GG), including some fires and one report of injuries. The fire hazard was caused by repeated bending of the fan's wires during oscillation resulting in broken wires. Haier finally reported the incidents to the CPSC in December 2004, but only after the CPSC asked the company for a report. In November 2005, Haier America and the CPSC announced a recall of the fans.

Federal law requires manufacturers, distributors, and retailers to report to the CPSC immediately (within 24 hours) after obtaining information reasonably supporting the conclusion that a product contains a defect that could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or violates any consumer product safety rule or any other rule, regulation, standard, or ban enforced by the CPSC.

"Prompt reporting in this case could have prevented fires and injuries," said newly-installed CPSC Chairman Inez Tenenbaum. "Companies have a responsibility to immediately let us know of potential hazards, and we will hold them to their duty."