Peeling paint can be caused by frequently heating items which produce high amounts of steam. If the condensation caused by this steam is not wiped off directly after use it may cause the paint to lift over time resulting in peeling paint. This is not unlike the reaction you would find in bathroom with no ventilation.
It can also be caused when food or liquid finds itself under the tray and we continue to cook without noticing it. The paint around the spot may then start to peel.
Note: If there is any metal exposed on the inside of the unit, the unit should not be used. Exposed metal may cause the unit to spark and therefore could be a potential fire hazard.