Peloton subpoenaed following reported injuries, child death

The company is also subject to a class action litigation and personal injury claims.
By Laura Lovett
02:35 pm
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Photo courtesy of Peloton 

Less than a week ago, Peloton announced it would have a treadmill back on the market by the end of August, following a May recall of its Tread+ and Tread due to a slew of reported injuries and one child death associated with the fitness equipment.

However, an SEC document reveals that connected fitness device company Pelton’s woes are far from over. 

The Department of Justice and the U.S. Department of Homeland Security have subpoenaed the company for information and documents related to their reporting of injuries associated with their treadmills. The documents also revealed that the SEC is investigating its public disclosure concerning the injuries and child death. 

Earlier this year, the U.S. Consumer Protection Safety Commission investigated the company for the reported injuries and death. Peloton has agreed to work with the commission and recall the products. However, federal subpoenas and the CPSC investigation aren’t the company’s only legal battles. 

“In addition to the CPSC investigation, we are presently subject to class action litigation, private personal injury claims, and regulatory proceedings related to the Tread+ and Tread recalls that, regardless of their merits, could harm our reputation, divert management’s attention from our operations, and result in substantial legal fees, judgments, fines, penalties, and other costs,” the company wrote in the SEC filing. 

WHY IT MATTERS 

According to the CPSC, Peloton’s Tread+ was involved in a number of injuries and the death of a 6-year-old child. After increasing pressure from the CPSC, Peloton announced the recall of its Tread+ and Tread. 

Last week, the company came out with a new version of the Pelton Tread that comes with a number of safety features including a Tread Lock that requires users to put a four-digit passcode in the machine to unlock the treadmill, plus a Safety Key. Both of these features were rolled out in May on the Tread+ aimed at the clients who decided to not return their product during the recall. 

The recall financially impacted the publicly traded company. In a May earrings call, it reported that the recall would cost the business around $165 million. 

THE LARGER TREND

Since it was founded in 2012, Peloton has been quickly growing. The company went public in 2019 priced at roughly $29 a share. As of today, the stock is listed as  just over $100 per share

Peloton may be looking beyond connected bikes and treadmills in the future. According to a 9to5Google report, code in the Peloton app indicates that the company may be working on a rowing machine as well. 

Tags: 
Peloton, SEC, DOJ
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