When a Product Must Be Recalled

Posted on Monday, December 24, 2018

By law, all manufacturers, importers, distributors and retailers must notify the Consumer Product Safety Commission (CSPC) if they obtain information that reasonably supports the conclusion that a product:

Fails to meet mandatory consumer product safety standards.

Contains a defect that could create a substantial hazard to consumers.

Creates an unreasonable risk of serious injury or death.

Under the Consumer Product Safety Act,all items subject to a recall must be disposed of or repaired. Future versions must be redesigned to eliminate the hazards, and new model numbers, serial numbers, and labeling must be used to distinguish the new products from their hazardous predecessors.

Click here for an online CPSC form that businesses can use to report potentially hazardous or defective products.

Under the Consumer Product Safety Act,companies must immediately contact the CPSC if they have such information. How does the government define "immediately?" As a general rule, you file a report within 24 hours.

When hazards are discovered, the most common remedy involves a product recall. This can take the form of a repair, a refund or a replacement of the dangerous product. Regardless of the remedy, companies need to be aware of the four major steps involved in the recall process:

1. Investigating the potential risk. Once a report is filed, the CSPC investigates to determine if the defect poses a substantial product hazard. However, the agency also has a "Fast Track Product Recall Program," that can be used if a company implements a satisfactory consumer-level voluntary recall within 20 days. Consult with legal advisers about the best route to take.

2. Halting production and notifying retailers. While each recall is different, manufacturers must generally identify defects, stop production of the defective items and isolate any existing inventory that needs to be recalled. Once this is accomplished, it is necessary to determine an appropriate remedy after consulting with CPSC staff. Manufacturers must also notify retailers and supply adequate information to make it easy for them to isolate the items in their inventories and stop sales in their stores.

The Consumer Product Safety Commission has jurisdiction over approximately 15,000 products, including toys, coffee makers, furniture and lawn mowers. However, some types of products are covered by other federal agencies. For example, cars, trucks and motorcycles are under the jurisdiction of the Department of Transportation.

3. Implementing the recall. Retailers bear much of the burden of implementing the actual recall since they are generally the primary link between the manufacturer and the consumer. Manufacturers must provide support so that retailers can accurately and completely track the recalled items and ensure that no more sales are made. In addition, retailers are often called upon to help track down consumers of recalled products and provide refunds, repairs or replacements.

4. Getting the word out to the public. This is perhaps the most important aspect of a recall. Depending on the circumstances, the CPSC may require a number of notification methods. For example, setting up toll-free phone numbers for customers, sending out press releases and video news releases, arranging in-store displays and posting website warnings. No matter how consumers are informed, the warnings must be clear and unambiguous.

(In a future article: A useful, detailed checklist for companies facing the prospect of a product recall.)

Posted in Manufacturing/Distribution

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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