Peloton Faces Consumer, Investor Lawsuits Related to Tread+

A consumer class action lawsuit was filed on April 20 against Peloton related to safety concerns around the Tread+, and investors also are pursuing a lawsuit alleging misleading claims by the company that impacted their investments. (Photo by Peloton.)

Consumers have filed a class action lawsuit against Peloton related to safety concerns with its Tread+ treadmill, and investors have filed a separate lawsuit alleging fraud.

Peloton shared in March that the Tread+ had been involved in accidents involving children, and one of those accidents resulted in the death of a child.

On April 17, the Consumer Product Safety Commission warned the public not to use the Tread+ if they have young children or pets. In a press release, Peloton called the CPSC warning “misleading and inaccurate,” and declined to recall the product.

The company shared: “There is no reason to stop using the Tread+, as long as all warnings and safety instructions are followed. Children under 16 should never use the Tread+, and members should keep children, pets and objects away from the Tread+ at all times.”

The company reminded owners of the Tread+ to remove the safety key from the treadmill when it is not in use and keep the key out of reach of children.

Peloton also shared that its instructors now share in its classes additional safety messages reminding members to keep children, pets and objects clear of the Tread+ during workouts and to remove the safety key after the workout.  

A consumer class action suit, Albright v. Peloton Interactive, Inc., filed in the U.S. District Court for the Northern District of California on April 20, alleges that Peloton’s advertisements using pictures of a woman with a young girl indicated to consumers that the product was safe to use around children. However, the lawsuit alleges that because some children and pets have been trapped under the machine, which sells for $4,295, while it was running, the product has a design flaw that makes it unsafe to children.

The lawsuit, which was brought by Shannon Albright, asks for either a refund or replacement of the device with one that is safe to be used around children and pets.

A second lawsuit, Wilson v. Peloton Interactive Inc., was filed in the U.S. District Court for the Eastern District of New York on April 29 on behalf of investors. It alleges that Peloton failed to tell investors that its Tread+ product could injure or kill children and pets. The lawsuit also names as defendants CEO John Foley and Chief Financial Officer Jill Woodworth.

The investor lawsuit notes that on Oct. 15, 2020, Peloton put out a recall that affected 30,000 of its bikes after the company received 120 reports of breakage of clip-in pedals and 16 customer injuries due to the pedal issues.  

At the time of that recall, a Peloton spokesperson told Business Insider, which reported on the recall: “There is no greater priority than the safety and well-being of Peloton members.”

An Oct. 16, 2020, article by the New York Times reporting on the recall included a statement that said the company was focused on the safety and well-being of customers. In addition, the Peloton spokesperson said: “We take pride in providing the best equipment, proprietary networked software, and world-class streaming digital fitness and wellness content that our members love.”

The company asked users to stop using the affected bikes until a replacement arrived.

However, the company did not issue a recall on the Tread+, and after Foley announced no recall, Peloton’s stock price fell $16.28 per share or more than 14 percent during the next three trading days, which the lawsuit alleges damaged investors.

The lawsuit states: “Had Plaintiff and the other members of the Class been aware that the market price of the Company’s securities had been artificially and falsely inflated by the Company’s and the Individual Defendants’ misleading statement and by the material adverse information which the Company and the Individual Defendants did not disclose, they would not have purchased the Company’s securities at the artificially inflated prices that they did, or at all.”

Peloton is traded on Nasdaq under the symbol PTON. Its share price has fallen to its lowest in more than a year, closing at $95.84 on May 3. Its high during the past year was $167.42 on Jan. 13, 2021.

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