On August 5, 2025, Royal Sovereign International, Inc. reached a civil and criminal resolution with the United States Department of Justice (DOJ) that includes a $16.025 million civil penalty—the maximum authorized under the Consumer Product Safety Act (CPSA)—a restitution amount of nearly $400,000, and a guilty plea to one count of knowingly and willfully failing to report a product safety hazard to the U.S. Consumer Product Safety Commission (CPSC). This is only the first time since 2021, and only the second time ever, that a company has entered into a criminal resolution in a CPSA case.
Royal Sovereign imported and sold more than 33,000 portable air conditioners between 2008 and 2014, before the products were recalled in 2021. According to DOJ, the air conditioners were defective due to a faulty drain motor that could short circuit, causing the products to catch fire. According to DOJ, Royal Sovereign misled CPSC in November 2010 “by telling the agency that it was aware of only two fire incidents related to the air conditioners and that the products had been discontinued. In reality, the government alleged, the company was aware of at least 16 fires and continued to distribute the products anyway.” The company continued distributing the products for another four years. By 2016, DOJ alleged, the products had caused at least 42 fires.
The 2021 recall notice reported that a woman died in 2016 from smoke inhalation after her air conditioner caught fire, also injuring her two children. In its guilty plea, Royal Sovereign admitted that it willfully failed to timely report the hazard to CPSC, despite knowing about the issue with the products from consumer complaints and lawsuits.
As part of the resolution, Royal Sovereign agreed to a civil settlement that includes a $16.025 million civil penalty. CPSC and DOJ have the authority to seek civil penalties if a company knowingly fails to comply with reporting obligations under the CPSA. Under the CPSA, manufacturers, distributors, and retailers of consumer products must report to CPSC upon obtaining information that reasonably supports the conclusion that its product (1) fails to comply with a consumer product safety rule, (2) contains a defect that could create a substantial product hazard, or (3) creates an unreasonable risk of injury or death. Companies may be held civilly liable for knowing violations of the reporting requirement, while knowing and willful failures to report can result in criminal liability. In recognition of Royal Sovereign’s limited ability to pay the penalty—the company’s former CEO died in 2023, and the company permanently ceased all operations—DOJ agreed to suspend all but $100,000 of the civil penalty.
The plea agreement did not reflect a negotiated criminal fine amount but specified that the company would pay $395,786.48 to a victim compensation fund administered by the court. Sentencing is scheduled for December 16, 2025. The court could impose a fine up to the greatest of $500,000 or twice the amount gained by the company, or twice the amount lost by victims as a result of the offense.
As we previously reported, CPSC has increased pressure on consumer product companies through an increase in the frequency and amount of civil penalties and continues to insist on larger civil penalties in settlement agreements with companies. Moreover, this is the second time that DOJ has pursued a criminal resolution in a CPSA case, demonstrating the agencies’ commitment to more aggressively pursue alleged CPSA violations.
Acting Chairman Peter A. Feldman underscored these sentiments, noting that “Royal Sovereign’s failure to report a deadly defect led to tragedy, including the death of a mother and serious injuries to her children. CPSC will not hesitate to use the full weight of its executive power to pursue violations of the law—including criminal penalties—and we thank our partners at DOJ for helping to bring this company to justice.”
Given CPSC’s increasing willingness to seek maximum civil penalties and the agency’s shifting priorities and enforcement approaches, as well as DOJ’s continued interest in pursuing criminal charges when it believes a company has willfully violated the CPSA, it is critical for companies to understand and comply with consumer product safety requirements. Consumer product companies need to have a plan in place to evaluate and respond to information that may trigger their reporting obligations and should also ensure that they are taking a thoughtful and measured approach to compliance.
[View source.]
