Peloton has been subpoenaed by the U.S. Department of Justice and the Department of Homeland Security following dozens of injuries and one death that forced the luxury fitness equipment maker to recall all of their treadmills.
Making a massive $607.1 million in the fourth quarter of 2020, Peloton became a household name during the pandemic. Most public gyms were completely closed due to the pandemic and fears of returning even after they opened kept the home fitness brand selling thousands of their luxury treadmills.
However, reports of injuries, and the death of one child who was horrifically caught under one of the treadmills, led to Peloton issuing a full recall of their treadmills last May. The company reported a loss of $4.1 billion from its market value.
The recall affects over 125,000 Tread+ machines in the U.S., according to CNBC, and roughly 1,050 Tread products. For whatever reason, Peloton was reluctantly resisting the recall. It told the U.S. Consumer Product Safety Commission that it had no intention to follow-through with the agency’s demands.
After news of the subpoena broke, as well as an investigation by the Securities and Exchange Commission for its lack of public disclosure about the incidents, the company apologized for how it was handling the conflict.
“I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+,” Peloton CEO John Foley said in an official statement. “We should have engaged more productively with them from the outset. For that, I apologize.”
“Our goal is to be the go-to fitness solution and the largest and safest home fitness brand in the world,” Foley continued. “We’ve worked hard to make sure the new Tread truly earns its spot in Members’ homes.”
Despite the recall, Peloton has continued to sell its other products, such as a new line of workout bikes. This week the company slashed the price of the bike by hundreds of dollars in an effort to reach a larger market and search for more avenues of profit.
“We may be unable to attract and retain Subscribers, which could have an adverse effect on our business and rate of growth,” the company wrote in their most filing with the SEC. Their stock has recently fallen by about 25% year to date, according to CNBC.
In the lawsuit against Peloton, the company is accused of selling and marketing the treadmills as “safe and appropriate for use by families in the home, even though its design makes it inherently and uniquely dangerous to children.”
Touchscreens on the treadmill were becoming detached and falling off, causing potential harm to runners. Some reported that their hands and legs would get stuck under the treadmill, resulting in the death of a child, and that it was very hard to come to a stop using the machine.
Peloton plans to reintroduce the Tread line with a new and improved 24-inch touchscreen that is securely fashioned to the treadmill, and a safety lock that ensures that only users who know a four-digit code are able to start and operate the machine. The safety tread lock was previously only available to customers who paid for the “All Access” subscription, but Peloton confirmed that the feature would now be available to everyone.
“The agreement between CPSC and Peloton is the result of weeks of intense negotiation and effort, culminating in a cooperative agreement that I believe serves the best interests of Peloton and of consumers,” said Robert S. Adler, chairman of the Consumer Product Safety Commission. “Today we have taken steps to prevent further harm from these two products.”
Anyone who bought a recalled machine is eligible for a free repair.