Last week, CPSC announced that Costco Wholesale, Corp., of Issaquah, WA, had agreed to pay a $3.85 million civil penalty for failing to report to the Commission that the EKO Sensible Eco Living Trash Cans sold by Costco contained a defect that created an unreasonable risk of serious injury to consumers.

The Commission’s vote was 4-0 in favor of provisionally accepting the noted penalty agreement. A link to CPSC’s Press Release announcing the penalty is here.

On the basis of its investigation, CPSC charged that the EKO Trash Cans’ black plastic protective collar opening on the back of the Trash Can receptacle could potentially become dislodged and expose a sharp edge, which posed a laceration hazard to consumers. Indeed, Costco had received 92 consumer complaints related to the EKO Trash Cans between December 2013 – May 2015, including 60 complaints from consumers who received injuries, of which 13 were laceration injuries. As a result, CPSC concluded that Costco had not notified the Commission immediately about the complaints and potentially defect EKO Trash Cans.

Costco in collaboration with CPSC initiated a recall of 367,000 defective EKO Trash Cans on July 17, 2015. Consumers were asked to immediately stop using the recalled trash can and return it to Costco for a full refund or free repair kit to fix the trash can’s defective protective plastic collar.

In addition to paying the civil penalty, Costco also agreed to maintain a compliance program designed to achieve compliance with the Consumer Product Safety Act and a system of internal controls and procedures to ensure that Costco discloses information to the Commission in accordance with applicable law. Furthermore, Costco’s settlement of this matter does not constitute an admission of CPSC charges.

Costco’s settlement agreement with CPSC is the latest example of CPSC levying multi-million dollar fines to companies for not reporting substantial product hazards in a timely manner. In 2010, provisions of the Consumer Product Safety Improvement Act increased CPSC’s maximum penalty to $15 million. As a result, civil penalties imposed by CPSC have risen significantly in recent years.