In settling the claims, HP denied the CPSC's allegations that the battery packs could create unreasonable risk of injury or death or that it violated the reporting requirements of the Consumer Product Safety Act.
“HP takes all customer concerns, potential safety issues and its obligations under the CPSA seriously,” a spokeswoman for the company said.
The CPSC accused HP of delaying acting on its knowledge that the battery packs were dangerous. By September 2007, HP allegedly already knew of 22 incidents associated with the batteries, at least two of which resulted in injuries and one which sent a consumer to the hospital. Nevertheless, HP did not issue a recall of 32,000 battery packs until October 2008, the agency said.
Between May 2009 and May 2011, HP recalled an additional 286,600 lithium-ion battery packs over concerns that the packs, which were prone to overheating and rupture, posed fire hazards.
The lithium-ion packs in question contained a defect that caused the batteries to overheat, leading to fire and burn hazards, the CPSC said. The packs were sold as a part of new HP notebook computers, as accessories or provided as spare parts for various models, according to the agency.
The computers containing lithium-ion battery packs sold for between $700 and $3,000, while the packs alone were sold for between $100 and $160, the CPSC said.
HP allegedly conducted a study between March and April 2007 that confirmed additional information about the battery packs but did not notify the commission about the incidents or the study until July 25, 2008, according to the agency.
Federal law requires manufacturers to report within 24 hours any information that a product contains a defect that could cause substantial harm.
The commission's staff voted 3-1 to provisionally accept the settlement, with one commissioner voting against the agreement on the grounds that the proposed penalty was too small.
“For a company the size of HP, a civil penalty of $425,000 represents a tiny fraction of its annual revenues, wealth, and financial resources,” Commissioner Robert S. Adler said in a statement last week. “The deterrent effect of this amount on a company that according to public records employs hundreds of thousands of employees and generates annual revenues in excess of a hundred billion dollars is infinitesimal.”
He also noted that although the small number of incidents and injuries associated with the packs was small, the comparatively minimal harm was a product of luck rather than actual hazard.
“Such a small penalty rewards good luck rather than demonstrates a small risk. Unfortunately, I fear it will be interpreted as the latter,” he said.
In voting to approve the settlement, Chairwoman Inez M. Tenenbaum said that although she shared many of Adler's concerns, enhanced product safety laws that did not apply in this case would allow for stricter penalties and more deterrence in the future.
Counsel information for HP was not immediately available.
The proceeding is In the Matter of Hewlett-Packard Co., docket number 12-C0006, in the Consumer Product Safety Commission.
--Additional reporting by Derek Hawkins. Editing by Kat Laskowski.
