HP has agreed to pay $425,000 to resolve allegations that it knowingly failed to inform the US Consumer Product Safety Commission about defective lithium-ion batteries, as required by federal law. As is often the case, the faulty batteries were prone to overheating, posing a fire hazard. The units were sold with new HP laptops and as separate accessories or spare parts for various systems.

Between March and April 2007, HP conducted studies on its batteries but failed to act on any knowledge gained (the CPSC report is unclear about precisely what that knowledge was). By September of that year, the Commission alleges that HP knew about some 22 incidents linked to the batteries with at least two cases resulting in injuries to consumers -- one of which sought medical attention.

"Federal law requires manufacturers, distributors, and retailers to report to CPSC immediately (within 24 hours) after obtaining information reasonably supporting the conclusion that a product contains a defect which could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or fails to comply with any consumer product safety rule," reads the CPSC's report.

The PC maker waited until approximately a year later in July 2008 to notify the CPSC about its flawed batteries, at which time the company was supposedly aware of at least 31 incidents. In October 2008, the outfit recalled 32,000 batteries for laptops spanning $700 to $3,000 as well as batteries sold individually for $100 to $160. By May 2011, the recall expanded to 90,000 affected units (list below).

Despite coughing up nearly half a million bucks to settle the claims, HP denies the CPSC's allegations. In the agreement (PDF), the company specifically resents the term "knowingly," adding that it didn't violate the Commission's reporting requirements because it was unaware of any defective batteries and regardless, the batteries never posed "an unreasonable risk of serious injury or death."