Generac agrees to $15.8M penalty in consumer product safety case

Generac Power Systems has agreed to pay a civil penalty of $15.8M in a settlement involving a U.S. Consumer Product Safety Commission Investigation into a defect found in portable generators. The agency stated that the defect created 'an unreasonably high risk of serious injury to the fingers of users'.

According to a press release issued by the Consumer Product Safety Commission on Friday, the settlement resolves Consumer Product Safety Commission charges that Genesee Depot's Generac (NYSE GNRC) did not immediately notify the agency of the fact that 32 models Generac and DR portable generators 6500 Watt and 8000W contained the defect.

The federal agency stated that Generac began receiving reports in October 2018 of consumers who had their fingers partially amputated by the handle of a portable generator. This continued into 2020. The agency stated that Generac failed to immediately notify the commission despite these reports.

The agency reported that by the time Generac submitted a report to the Consumer Product Safety Commission there had been five reports of finger amputations caused by consumers while trying to transport portable generators. These consumers were hospitalized, required surgery and/or sutures, and suffered permanent disfigurement.

Generac and agency announced jointly a recall on portable generators for July 29, 2021.

Generac is required to maintain and implement a system of internal controls, procedures and a compliance program to ensure compliance with Consumer Product Safety Act. Generac agreed to submit, for a three-year period, annual reports about its compliance program, internal control system, and internal audits on the effectiveness of this new compliance program.

Generac's spokeswoman stated via email on Friday that they take product safety and reporting requirements seriously and have fully cooperated with CPSC.

Tami Kou, a spokeswoman for Generac, said that the settlement agreement was entered into to end this matter and avoid any additional costs and distractions from a protracted and expensive legal proceeding. "Generac’s willingness to enter the settlement agreement is not an admission of liability or of the violation of CPSA, the CPSC or other laws." said spokeswoman Tami Kou.

According to the Consumer Products Safety Commission, Generac re-announced in November 2022 that it was recalling certain portable generators after receiving a new injury report. This followed earlier reports of finger amputations or finger crushing.

The recall affected portable generators of 6500-watts and 8000-watts sold in Canada and the United States. These generators were sold under the names Generac, DR, and HomeLink.

Generac warned that finger-pinching situations can occur if the unit's handle is not secured by a locking pin.

The consumer protection agency stated that 'Consumers are advised to stop using portable generators immediately, unless a locking pin is inserted into the handle to hold it in place, before and after moving the unit. They should also contact Generac to receive a free repair package consisting of spacers which will move the handle further away from the frame and eliminate the pinch point.

Generac spokesperson Kou told Business Journal that since the original recall in July 2021, there has been one more incident of finger-pinning.

Kou stated in November that Generac had developed a new kit of spacers which could be easily and quickly added to the unit. This would allow the handle to be moved away from the frame. Customers who responded to the recall will receive a new repair kit.

According to the agency, generators are sold in major hardware and home improvement stores across the country and online. Ace Hardware, Amazon and Blain's Farm & Fleet were among the retailers.

Consumer Products Safety Commission stated that the units were sold between June 2013 and June 2021 at a price of $790 to $1,480.