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Gree Electric Appliances Inc. of Zhuhai, a Chinese appliance manufacturer, and its subsidiaries agreed to pay $91 million to settle the criminal charges alleging that it failed to report that millions of its dehumidifiers sold to U.S. Consumers were defective and could catch fire.

According to the U.S. Department of Justice (DOJ), Gree Electric and Hong Kong Gree Electric Appliances Sales Co. Ltd. (Gree Hong Kong) entered into a deferred prosecution agreement (DPA) in connection with the criminal charges.

Under the DPA, in addition to the $91 million monetary penalties, Gree Electric and Gree Hong Kong also agreed to provide restitution for any uncompensated victims of fires caused by its defective dehumidifiers.

The Chinese appliance manufacturer's subsidiary in the United States, Gree USA Inc. pleaded guilty to the felony charge that it willfully failed to report to the U.S. Consumer Product Safety Commission (CPSC) about the dangerous dehumidifiers.

Gree Electric and its subsidiaries intentionally delayed reporting and recalling the dangerous dehumidifiers to reduce a significant and negative impact on the product's sales, the DOJ noted in the plea agreement.

On July 26, 2012, the CEO of Gree USA informed the top executives of its parent company that the Gree dehumidifier has a "very serious" quality problem. He sent them a video the product was catching fire and it could lead to lawsuits.

Consumers reported over 2,000 incidents involving Gree dehumidifiers

Instead of reporting the issue to the CPSC immediately, Gree Electric and its subsidiaries continued selling the dangerous dehumidifiers to U.S. consumers until mid-July 2013, when it finally notified the Commission about its decision to recall the products.

On September 12, 2013, the CPSC announced a voluntary recall of 2.2 million Gree dehumidifiers in the United States. Consumers reported more than 2,000 incidents including 450 fires and over $19 million in property damages caused by Gree dehumidifiers.

In a statement, CPSC Chairman Alexander Hoehn-Saric said, "This historic criminal enforcement action should serve notice" that the Commission "will use its authority to the fullest to keep American families safe."

DOJ Civil Division Acting Assistant Attorney General Brian Boynton said, Manufacturers and distributors must immediately report dangerous consumer products to the CPSC so that actions to protect consumers may be taken as soon as possible."

“Companies and executives that purposefully delay reporting to maintain profits will be prosecuted. The Department of Justice will continue to work closely with the CPSC to ensure consumers’ safety," he added.

On the other hand, Acting U.S. Attorney Tracy L. Wilkison for the Central District of California, commented,  “Gree’s months-long delay in reporting known problems with their dangerous and defective dehumidifiers was both criminal and costly...We will not allow companies to profit at the expense of consumers’ health and safety.”

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