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Fisher-Price fined $1.1M
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June 7, 2001: 2:20 p.m. ET
Mattel unit settles charges stemming from Power Wheels fire hazard
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NEW YORK (CNNfn) - Fisher-Price will pay the U.S. government $1.1 million, the biggest civil penalty ever levied against a toy company, to settle charges it failed to immediately notify regulators that its Power Wheels toy cars could catch fire.
Fisher-Price, a unit of Mattel Inc. (MAT: up $0.28 to $18.49, Research, Estimates), agreed to settle charges with the U.S. Consumer Product Safety Commission without admitting any wrongdoing.
The company maintains it acted appropriately.
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Mattel's Power Wheels 'Bubble Tractor' for toddlers. (Source:Mattel) | |
"Fisher Price does not agree with the CPSC allegations. We believe we acted appropriately and responsibly with respect to our reporting obligations," Fisher Price spokeswoman Laurie Oravec said. "However, we have agreed to pay the fine in order to avoid protracted litigation and ongoing disruption to our business. We have a difference of opinion with the commission."
The motorized ride-on cars were recalled in 1998 after reports said wiring problems sometimes kept them from stopping, causing them to overheat and catch fire. The CPSC said the defect caused up to $300,000 in property damage and left some children with minor burns or injuries after the vehicle caught fire or ran into something.
Power Wheels, which are meant for children ages 2 to 7, are still on the market. The recall affected 10 million cars made between 1984 and October 1998, but Fisher Price estimates about 3 million cars were in use at the time.
Mattel took a $27 million charge in 1998 to cover the recall. Consumers can still bring their Power Wheels to any service center for replacement electrical connectors and a new thermal fuse.
Mattel shares were up 20 cents to at $18.41 Thursday afternoon. 
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