The settlement addresses a long-standing failure to report defects in Packaged Terminal Air Conditioners equipped with DigiAir modules. Between 2017 and 2023, the company accumulated significant evidence of a life-threatening defect, including multiple warranty claims and fire incidents, yet delayed notifying the Consumer Product Safety Commission. The units were eventually recalled in August 2023 after the agency determined that the modules could overheat, posing severe burn and fire risks to users.

Beyond the financial penalty, the agreement mandates that Daikin overhaul its internal safety protocols. The company must appoint an Internal Compliance Monitor and submit annual audits to the commission to ensure future adherence to the Consumer Product Safety Act. The settlement is currently awaiting final approval following a public comment period.