CPSC and General Electric settle dishwasher case.

CPSC Chairman Ann Brown and CPSC's Chief Compliance officer Alan Schoem finally prevailed in their persistent efforts to force General Electric (GE) to amend its year-old recall of GE and Hotpoint Dishwashers. The appliances were recalled because of an alleged fire hazard related to a heat/air dry switch. The agency and the company announced a supplement to the original recall agreement on Dec. 16 in Washington.

In the original recall, October 1999, GE had offered rebates to consumers for purchases of new models. CPSC enforcement officials had pressed for a "free repair" rather than a rebate, but GE contended the dishwashers were past their useful lives and a "free repair" was not in the consumers' best interests. Under CPSC's enabling statute, the "rebate" option was legitimate and met the definition of a remedy for a safety defect.

The dishwashers had been manufactured between 1983 and 1989, making some nearly 18 years old. GE says that the average useful life of a dishwasher is 9 to 11 years. The company had reported to CPSC officials incidents related to the switch that resulted in some fire damage. The agency and the company then engaged in lengthy negotiations over the appropriate remedy.

The original recall program started in October 1999. The rebates offered varied depending on the type of new model consumers chose. Some 3.1 million of the dishwashers had been sold, but it was estimated that only 900,000 still remained in consumers' hands at the time of the recall. Of those, two-thirds had been installed in "managed properties," i.e., apartments and condominiums. The company agreed to provide a $15 allowance to the proprietors of those managed properties to do a re-wiring of the faulty switches until the dishwashers could be replaced because fleet owners maintain trained technicians on staff who could do the work safely.

Prior to the announcement of the new agreement, GE said that it had reached the individual owners of most of the old dishwashers and some 89,000 consumers had taken advantage of the rebate offer. CPSC also said that about 540,000 dishwashers located in managed properties had been rewired to date. That left some 271,000 appliances not accounted for, but CPSC insiders say no one really knows how many dishwashers are still in use.

The December 2000 supplemental agreement commits GE to provide free service on the old dishwashers to consumers who still have them--disabling the heat/air dry switch, thus eliminating the potential fire hazard.

GE says that this is not really a "fix" since rewiring the switch merely disables the drying option so that the switch will not heat to the melting point and potentially cause a fire.

GE had surveyed consumers prior to choosing the original rebate option, finding that 75% of them would choose a rebate rather than a so-called "repair."

The dishwashers in questions were of the low-end "value" brand appliances, and similar machines can be purchased in discount stores for as little as $160. But under the new CPSC-GE agreement, the old dishwashers, which could fail at any time due to old age, will be serviced at a cost to GE of between $75 and $100 per machine.

According to CPSC spokesmen, the agency's compliance officers negotiated with GE for months to persuade the company to offer the new free repair program.

Both CPSC and GE say that until the dishwashers are replaced or repaired, consumers should keep the dishwashers' door unlatched to prevent the flow of electrical current to the allegedly defective switch. CPSC claims there have been about 90 incidents of fire related to the heat/air dry switch. CPSC also claims there were 10 incidents that occurred since the original recall was announced. There have been no injuries.

Meanwhile, a lawsuit filed by the state attorney general of New York against GE based on the original recall will go forward. Eliot Spitzer, the state's chief legal officer, said that the state would seek restitution for consumers who took the rebates to buy new dishwashers. GE said Spitzer is "just plain wrong" in his assertions, that he has been "irresponsible with the facts of this important safety recall", and that he is "using the recall to grandstand for personal political advantage."

The question remaining is whether GE will have to make new offers to consumers who took advantage of the original rebate offer and bought new appliances or chose to keep their old dishwasher and pay for a service call out of their own pocket.

Understandably, consumers could be confused about the whole recall matter.

GE offers a toll free number (1-800-599-2929), and a website www.geappliancerecall.com to help clear up any questions.

GE's cost of implementing the free rewiring option could be more than $15 million if every owner of the aged dishwashers seeks a service call. This cost is in addition to the service calls on the dishwashers in managed properties and the rebates to customers who bought new appliances under the original recall. This extended recall offer sets a dangerous precedent for other appliances manufacturers. If government regulators can force the "repair" of products that are well beyond their expected useful lives in the name of safety, consumers may find the price of new appliances skyrocketing. That is because appliance manufacturers will have to factor in the cost of potential forced "repairs" each time they set a price on a new model. Consumers can expect to bear the costs of any so-called `perpetual warranties' that are mandated by government regulators.