ESG Enforcement Tracker

Royal Sovereign International Inc has been sentenced to pay a criminal fine of USD 8 million and an additional USD 395,786 in restitution to victims following its guilty plea for wilfully failing to report dangerously defective air conditioners to the U.S Consumer Product Safety Commission (CPSC), in breach of its reporting obligations under section 15(b) of the Consumer Product Safety Act (CPSA).

This criminal penalty follows prior civil enforcement action arising from the same conduct, pursuant to which the company was ordered to pay USD 16,025,000 in civil penalties, which is the maximum sum allowed by statute.

Between 2008 and 2014, the company imported and sold more than 33,000 air conditioning units, manufactured in China, to consumers in the United States. It was subsequently determined that these units contained a defect in the drain motor, which could cause the units to short-circuit, ignite, and burn uncontrollably. The defect was linked to more than 40 fires and one fatality, reported in 2016 when two children were injured and their mother died from smoke inhalation. A recall of the affected models was not initiated until 2021, and the company has since ceased operations.  

In 2010, Royal Sovereign reported to the CPSC that it was aware of only two fire incidents and that it had discontinued sales of the affected units. However, it is alleged that the company was, at that time, aware of at least 16 fire incidents and had not, in fact, ceased distribution.  It is this alleged misrepresentation to the CPSC that gave rise to the criminal proceedings, in addition to the earlier civil enforcement action.