Recalling a product is often a last resort for companies that are facing mounting public attention for an increasingly troublesome safety issue. Peloton was able to voluntarily recall their Tread+ and Tread treadmill machines, which is better than having the U.S. Consumer Product Safety Commission (CPSC) go over their head and issue a mandatory recall.
In the recall announcement in early May, Peloton CEO John Foley admitted the company made a mistake in their “initial response to the Consumer Product Safety Commission’s request that we recall Tread+.”
The CPSC seemed to be running out of patience, as they put out a press release on April 17, 2021 directing people to stop using the Tread+ product.
Voluntary Recalls Versus Mandatory Recalls
Voluntary recalls generally come from the manufacturer or regulatory agencies. Mandatory recalls are issued by the federal government, often in dire circumstances or when the manufacturer is being uncooperative. Different regulatory agencies have different recall levels. The U.S. Consumer Product Safety Commission categorizes product dangers as Class A, Class B or Class C.
Class A Hazards are those that pose a likely or very likely risk of serious injury, illness or death to people who use the product.
Class B Hazards are those that aren’t likely to cause grievous injury or death but do have that potential. Class B Hazards are also products that pose a likely or very likely risk for a moderate injury or illness.
The Class C Hazard categorization is for products with defects that have an unlikely risk for serious injury or illness, or when a moderate injury or illness is potentially possible.
Essentially, Class A Hazards are very dangerous and have the highest priority for recalls while Class B and Class C could potentially be dangerous when used certain ways or by certain people.
The hazard listed for both the Peloton Tread+ and Tread on the U.S. Consumer Product Safety Commission’s website is, “Adult users, children, pets and objects can be pulled underneath the rear of the treadmill, posing a risk of injury or death.”
This isn’t the first Peloton recall. In October 2020 the company also recalled their PR70P Bike Pedals because they could potentially break during use and cause lacerations.
Effects on Peloton
The day the recall was announced, May 5, 2021, Peloton shares dropped 15 percent, reducing the company’s total valuation by approximately $4.1 billion. If anything, the company announced the recall at the opportune time, as their stock price had already reached what appeared to be the trough of a five-month correction that started back in January 2021, when it hit a peak of $167.42.
Analysts have mostly adjusted their price targets for the company down from a range of $177 to $125 prior to the recall to $135 to $105 after the recall. Some of those analysts noted that the lower priced treadmill in the recall – the regular “Tread” – would be back on the market in just eight weeks (around early July 2021).
Peloton definitely took a hit from the recall both in their valuation and their reputation, but the actual damage to their business doesn’t appear to be dire in scope.
What About Class Action Lawsuits?
According to the U.S. Consumer Product Safety Commission, Peloton had received 72 reports of adults, children and pets (as well as other objects) being pulled under the treadmill by the time they announced their voluntary recall on May 5, 2021. A six-year-old child died of their injuries and 29 other children suffered injuries ranging from second- and third-degree abrasions to broken bones and lacerations.
That’s definitely serious, but it’s not as serious as something like the Takata defective airbag problem that is still causing deaths to this day. Those airbags were put into literally millions of Hondas, Toyotas, Acuras, Mazdas and many other vehicles. Back in 2016, the NHTSA estimated that 42 million vehicles would be affected by that recall, and that 64 million airbag inflaters were affected. In the U.S. alone those airbags are alleged to have injured hundreds and caused the deaths of nearly 20 people.
The roughly 125,000 affected Peloton treadmills pales in comparison to the millions of airbags in the Takata recalls, but Peloton is still going to face legal headaches because of the recall.
So far at least two class action lawsuits have been brought against Peloton over the Tread and Tread+ dangers. The first, Albright v. Peloton specifically takes issue with Peloton’s advertising showing the treadmill with a woman and young girl, which allegedly led the plaintiff to incorrectly believe the product was safe to use around children.
The second, Wilson v. Peloton, was a lawsuit brought by the company’s investors over the company’s failure to warn investors about the treadmill dangers. That lawsuit points to the earlier bike pedal recall and the company’s late action on the Tread recall, alleging the company put off addressing these dangers to keep their stock valuation artificially inflated.
Have You Been Injured by Defective Workout Equipment or Other Products?
Every company that sells a product, whether it’s food or workout equipment, has a duty to their customers. If it turns out their products are unsafe, they need to issue warnings and recalls quickly and transparently. They should be held liable for any injuries or deaths that occurred due to things like product defects, design defects, unclear instructions or inadequate risk warnings.
If you believe you or a loved one have a dangerous or defective product personal injury case in Houston, contact the Weycer Law Firm at (713) 668-4545.