$500K Penalty Over Fire Hazard with Floor Fans

The U.S. Consumer Product Safety Commission (CPSC) announced that SMC Marketing Corp., of Grand Prairie, Texas, a subsidiary of Shell Electric Mfg. (Holdings) Co. Ltd. (Shell Electric Holdings), of Hong Kong, has agreed to pay a $500,000 civil penalty. The penalty, which has been provisionally accepted by the Commission, settles allegations that the company failed to report to CPSC in a timely manner about fires and incidents involving their oscillating floor fans.

From April 1998 through April 2001, SMC imported and sold in the United States about 2,300 SR-18 model pedestal floor fans. From January 1997 through October 2001, another subsidiary of Shell Electric Holdings exported 2.2 million SR-18 and SP-18 model pedestal floor fans to the United States. The fans, which were sold at Home Depot stores, were defective. The electric power cord could become damaged by the oscillating motion of the fan. The cord damage could cause a short circuit and possible ignition of the plastic case, resulting in a fire hazard.

Between November 1999 and January 2004, SMC learned of at least 46 incidents involving the fans resulting in either reports of fire or smoke damage to consumers’ homes, and one alleged personal injury. In December 2002, CPSC staff inspected SMC’s records and were informed of only two incidents with the fans, despite the fact that the firm was aware of numerous incidents that allegedly resulted in fires or smoke damage. In a follow-up inspection conducted by CPSC in August 2003, SMC once again failed to disclose its knowledge of additional incidents.

Finally, on June 6, 2004, SMC reported to CPSC additional incidents with their fans. On June 10, 2004, SMC, Home Depot and CPSC announced the recall of 2.2 million fans.

According to federal law, manufacturers, distributors, and retailers are required to report to CPSC immediately (within 24 hours) after obtaining information which reasonably supports the conclusion that a product contains a defect which could create a substantial risk of injury to the public, presents an unreasonable risk of serious injury or death, or violates a federal safety standard.

In agreeing to settle the matter, SMC denies that the fans were defective and that it violated the reporting requirements of the Consumer Product Safety Act.

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