On Tuesday, Peloton announced the upcoming release of its entry-level Tread device. The news came ahead of a disappointing earnings report and after recalls of both of its treadmill products. Today, the connected fitness company noted in a filing with the SEC that it has been subpoenaed by both the U.S. Department of Justice and Department of Homeland Security.
Both subpoenas are part of investigations around the way the company reported injuries from its treadmills. It’s seemingly another sign that, in spite of the return of one of its two Tread products to market, the larger implications are far from over for the company.
Peloton writes in the filing:
Injuries sustained by Members or their friends and family members, or others who use or purchase our Connected Fitness Products, could subject us to regulatory proceedings and litigation by governance agencies and private litigants brought against us, that regardless of their merits, could harm our reputation, divert management’s attention from our operations and result in substantial legal fees and other costs. For example, we are presently subject to a CPSC investigation and other litigation related to injuries sustained by Members and others who use or purchase the Tread+, and we have reporting obligations to safety regulators in all jurisdictions where we sell Connected Fitness Products, where reporting may trigger further regulatory investigations.
The company declined to comment further on the investigations.
Peloton was, notably, at odds with the U.S. Consumer Product Safety Commission (CPSC)’s initial warning to stop using its treadmill products after an accident with the Tread+ resulted in a child’s death. At the time, Peloton said it was "troubled" by the reporting and insisted that "there is no reason to stop using the Tread+, as long as all warnings and safety instructions are followed." In May, CEO John Foley apologized for the pushback and agreed to work with the CPSC on a recall.
The Commission cited more than 70 incidents in all, noting, “a six-year-old child recently died after being pulled under the rear of the treadmill. In addition, Peloton has received 72 reports of adult users, children, pets and/or objects being pulled under the rear of the treadmill, including 29 reports of injuries to children such as second- and third-degree abrasions, broken bones, and lacerations.”
The cheaper Tread model, meanwhile, was at the center of separate issue wherein the product’s touchscreen could detach and cause injury during use. The new version of the device features a reinforced screen. The recalls impacted around 125,000 Tread+ systems and more than 5,500 Treads, which were in early release.