Hunton insurance attorney, Latosha Ellis, along with Hunton product liability and mass tort attorneys Elizabeth Reese and Alexandra Brisky Cunningham, recently published an article in Risk Management discussing key lessons from Peloton’s Tread+ Recall.
On April 17, the U.S. Consumer Product Safety Commission (CPSC) issued a rare unilateral “urgent warning” about Tread+ machines, urging consumers to stop using the treadmills because they posed “serious risk to children for abrasions, fractures and death.” Initially, Peloton refused to recall the equipment and called the CPSC’s warning “inaccurate and misleading.” But less than two weeks later, Peloton acknowledged its “mistake” and formally issued a recall. The company disclosed that it had received 72 reports of adults, children, pets or objects being pulled under Tread+ machines, 29 of which involved injuries to children. Peloton is currently the subject of investigations by the Securities and Exchange Commission, US Department of Justice, and Department of Homeland Security over its public disclosures about reported consumer injuries.
The recall and events leading up to it offer valuable lessons in risk management for all consumer product companies. The article discusses how companies can leverage recall insurance, commercial general liability, and directors and officers liability policies to execute a recall swiftly, minimize losses and maintain customer relationships in the wake of a recall.