Peloton Sold Rusted Bikes to Customers and Allegedly Tried to Hide It

Executives at the exercise equipment company hid rust on non-visible parts of its spin bikes and sold them to customers for more than $2,000. The plan involved using a chemical solution to hide the fact that the paint on a bunch of bikes received from a supplier in Taiwan was corroding.

The project was described as a way to prevent another expensive recall by eight current and former employees of the company. A 6-year-old child was pulled under one of the machines and the pricier Tread+ was recalled due to a faulty screen.

According to documents seen by the Financial Times, the Tinman project used a solution that would form a black layer over rusted bike parts. According to sources cited in the report, warehouse workers were told to spot rust and determine if a bike was sellable or non-sellable. One worker told the Financial Times that he felt pressured to mark bikes with medium rust as light rust when Peloton was struggling to keep up with demand.

There was no direction by Peloton to reclassify or deem this inventory unsaleable, and it is against its policy and practices. If anyone did that, they were acting against the company's policies and practices.

Several warehouse workers tasked with inspecting the bikes told the Financial Times that some of them were sold with severe rust and one person sent a photo of a rusted bike to the new outlet as recently as last week.

Even for Bike-Pluses, which cost $2,495, they were still delivering them.

The company claimed that it had no impact on a bike, and came up with a term that made it sound like a feature.

An outbound team lead told the Financial Times that it was the single driving factor in his beginning stages of hatred for the company that he had spent the previous year and a half falling in love with.

At least 6,000 bikes were affected and inspected by 120 staffers. The US Consumer Product Safety Commission wouldn't say whether it was aware of the problems but stated that companies must notify the entity if there are defects in a product which could create a substantial product hazard.

According to the report, customers haven't reported problems with the rusted bikes, and promised replacements.

We haven't found evidence or received complaints that the issue presented a problem. We will work with the Member to resolve the problem if we become aware that it has caused a problem in any bike.

It was recently reported that thousands of spin bikes and treadmills are sitting in warehouses and cargo ships because of poorly managed supply in the wake of sinking demand. The company's stock has plummeted since the start of the year but has seen a small increase in recent weeks as Amazon, Nike, and others are being floated as potential suitors.