Compliance audits are a valuable option for the Commission – so is third-party monitoring.

The U.S. Consumer Product Safety Commission (CPSC) today announced approval of a civil penalty agreement with HSN, Inc. (formerly the Home Shopping Network). HSN imported and distributed more than five million Joy Mangano brand “My Little Steamer” products with a defect that could spray or leak hot water during use. CPSC is aware of at least 178 injuries related to the steamers, including serious burns but no fatalities. Rather than reporting immediately, as is required under the Consumer Product Safety Act, HSN took more than six years to report the defect information, despite knowledge of the defect. I voted to approve this settlement agreement, which fines HSN $16 million, near but below the maximum penalty allowed under the law. This penalty is appropriate given the facts of the case.

I have long advocated for CPSC’s use of injunctive relief alongside civil penalties. I am pleased that, in addition to the monetary penalty, the HSN settlement agreement includes important auditing requirements. HSN must maintain a compliance program and a system of internal controls. Further, HSN agrees to submit annual audit reports regarding that program for three years. CPSC’s inclusion of audit provisions here, and in several recent civil penalty agreements, not only serves to deter violations, but also can be an effective tool to promote full compliance with the law.

In addition to internal audit provisions, external third-party monitors are appropriate in certain cases. CPSC is authorized to pursue these monitorships. The agency has secured such relief in civil litigation and may appropriately seek it in settlement negotiations. As I have stated previously, third-party monitors are appropriate in cases with aggravating factors, particularly those involving recidivism and where there is evidence that a firm has failed to monitor itself appropriately. This remedy must remain top of mind as the Commission considers future compliance cases.