Peloton in hot water with government regulators over mishandling of Tread+ recall

Photo (c) Thomas Barwick - Getty Images

The company seems to be back on the straight and narrow and willing to replace or refund as customers request

Exercise equipment manufacturer Peloton was hoping that the worst of its recall issues was behind it, but that doesn't appear to be the case. The company is now being investigated by the Securities and Exchange Commission (SEC), the Department of Justice, the Department of Homeland Security over how it reported injuries suffered by customers who used its products. And that’s just for starters. 

In a recent financial filing with the SEC, Peloton said it had been named in several lawsuits related to the recalls. In one of those cases, a Peloton member filed a class action lawsuit over alleged violations of various California state laws related to the Tread+ and matters contained in a Consumer Product Safety Commission (CPSC) warning. 

That CPSC admonition came on the heels of the death of one child and 72 other injuries involving Peloton’s treadmills, including incidents involving adult users, children, pets, and objects being pulled under the rear of the treadmill. There were around 30 reports of injuries to children, including second- and third-degree abrasions, broken bones, and lacerations.

Bad initial reaction

When the CPSC issued its warning and advised consumers to immediately stop using the recalled Tread+ and contact Peloton for a full refund, the company apparently wasn’t responsive enough -- quite possibly because those recalls were estimated to cost Peloton $165 million in lost revenue.

Clayton of Bentonville, Ark., pointed out in a ConsumerAffairs review that the treatment he received as a customer was far from what he expected.

“Suppose this is the way a customer is treated before they have even received their order. How is a customer going to be treated if they have an issue with one of their products?" he wrote

“Does this level of miscommunication, dishonesty, and incompetence exist at all levels of the business; do engineering, quality, safety, and warranty suffer from the same level of deception as sales and customer management. Given my experience and the fact they are currently in the middle of a recall for their Tread product, which literally kills children, I think so.”

Peloton tries to move forward

Peloton has now decided to face the music and admit that it made a mistake to reject the CPSC's recall request.

"I want to be clear, Peloton made a mistake in our initial response to the CPSC's request," Peloton CEO John Foley said. "We should have engaged more productively with them from the outset. For that, I apologize."

Following the CPSC’s recalls, Peloton eventually dropped the Tread and Tread+ products from its product lineup. The company’s website now sports a new Tread that “empowers you to run farther, train better and recover smarter with a range of total body workouts that keep you motivated every step of the way.”

Peloton appears ready to work with any consumer that bought a recalled product. The company states on its site that it will send technicians to customers' homes for a free service to complete repairs. 

A complete guide on how to obtain a refund or repair is available here.

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