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(LEAD) Consumers sue Coway over faulty water purifiers

All News 15:11 July 26, 2016

(ATTN: ADDS more details in second para; UPDATES with Coway's share price at bottom)
By Kim Eun-jung

SEOUL, July 26 (Yonhap) -- A group of 160 consumers on Tuesday filed a suit against Coway, South Korea's leading water purifier maker, demanding 1.6 billion (US$1.4 million) in compensation for damages from using water purifier models with a nickel coating that tainted the water.

Nickel from the coating was found in dispensed water in three ice maker/water purifier models installed from April 2014 to December 2015 by Coway, with the number of users involved estimated at about 87,000.

Coway vowed to take responsibility should any health problems be confirmed from using company products, estimating some 53.8 billion won to recall and discard the faulty appliances and pay back more than 50 billion won in rental fees.

The plaintiffs claimed the company knew of the defect for over a year and tried to cover it up, and each demands 1.5 million won for a medical checkup and 1 million won in compensation for their emotional distress.

"Coway discovered the nickel coating was mixed into the dispensed water in July 2015, coinciding with when private-equity firm MBK Partners, its largest shareholder, was pushing for sales of its stakes," the plaintiffs said in the complaint. "The company did not disclose the findings on concerns over its impact on its share prices."

The consumers accused Coway of inefficient early action that resulted in more damages, saying Coway only added a cover to stop the nickel coating from mixing into the water without replacing the problematic component.

Industry experts say the biggest issue at stake is whether the intake of a small amount of nickel for an extended period of time is harmful to humans.

It is widely known that breathing nickel dust can lead to lung cancer, but few studies have been conducted on the impact of the oral intake of the metal.

The users claim 10-20 percent of people, especially children with weak immune systems, are sensitive to nickel and that prolonged exposure to the metal could cause an allergic reaction in the skin.

"We doubt Coway's claims that nickel has a very slim chance of posing a danger to the human body," Nam Hee-woong, the attorney for the consumers, said. "About 800 more consumers will question the harmful effects of nickel in the second and third rounds of compensation suits."

The controversy has not only deepened the public health scare but also corporate distrust. South Koreans are still angry about toxic humidifier cleansers sold by British firm Oxy Reckitt Benckiser that killed more than 100 people.

Shares of Coway on the Seoul bourse fell 2.8 percent to 90,200 won on Tuesday, with its share price tumbling 16 percent this month alone.


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