Gree To Pay $15M Civil Penalty For Defective Dehumidifiers

Gree Dehumidifier

According to the U.S. Consumer Product Safety Commission (CPSC), Gree Electric Appliances Inc., of Zhuhai, China; Hong Kong Gree Electric Appliances Sales Co. Ltd., of Hong Kong; and Gree USA Sales Ltd., of City of Industry, CA, have agreed to pay a $15.45 million civil penalty to the government.

The CPSC said the penalty settles charges that Gree knowingly failed to report a defect and unreasonable risk of serious injury immediately regarding its dehumidifiers sold under 13 different brand names, including Frigidaire, GE, Gree, Kenmore and Soleus Air, as required by federal law; knowingly made misrepresentations to CPSC staff during its investigation; and sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards.

Gree's dehumidifiers had a defect that caused the machines to overheat and catch fire. These incidents began in July 2012 and caused nearly $4.5 million in property damage, the CPSC said. The dehumidifiers were recalled in September 2013. The recall was expanded in January 2014 and re-announced in May 2014.

Gree manufactured, imported and sold more than 2.5 million units nationwide. The dehumidifiers were sold by AAFES, HH Gregg, Home Depot, Kmart, Lowe's, Menards, Mills Fleet Farm, Sam's Club, Sears, Walmart and other stores nationwide and in Canada and online at Amazon.com and Ebay.com, from January 2005 through August 2013 for $110 to $400.

In addition to paying the civil penalty, Gree has agreed to implement a program to ensure compliance with the Consumer Product Safety Act (CPSA) and a related system of internal controls and procedures.

According to the CPSC, the compliance program requires written standards and policies and written procedures to ensure that all information regarding the firm's compliance with the CPSA, including reports and complaints, whether an injury is referenced or not, is conveyed to the firm's responsible employees. The compliance program also must address confidential employee reporting of compliance concerns to a senior manager; effective communication of compliance policies and procedures, including training; senior management responsibility for, and board oversight of, compliance; and requirements for record retention.

Gree does not admit to the CPSC staff's charges. The penalty agreement has been accepted provisionally by the commission by a 4 to 1 vote, the CPSC said.