Chinese company fined $600K for not disclosing product danger, delaying recall

An American subsidiary of the Chinese electronics and appliances giant Haier Group was assessed a $587,500 penalty for failing to promptly disclose that it knew wires were breaking in its fans, posing a risk of fire, thus delaying its recall.

Haier America Trading Llc. agreed to pay the fine to settle allegations that they collected information about 14 incidents -- including an injury -- between May 2004 and October 2004, but didn't report to the U.S. Consumer Product Safety Commission until December of that year. And that, the CPSC said, only happened after commission staff approached the company.

Companies are required to immediately inform the CPSC when they learn one of their products poses a risk of serious injury or death. The product was recalled in November 2005.

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

The stern language appears to signal a heightened interest in holding companies to federal consumer safety laws. The laws largely involve voluntary compliance, which some companies seem far more interested in following than others.

CPSC spokesman Scott Wolfson told WalletPop that the tone is indicative of Tenenbaum's intent to get companies to comply with federal safety laws.

"The faster a company reports to us the quicker we can take action to make sure other consumers aren't at risk," he said.