Archive for the ‘Recall Effectiveness’ Category

WeMakeItSafer Releases U.S.’s First Set of Comprehensive Consumer Product Recall Statistics Reports

Monday, December 21st, 2009

CPSC Recalled Product Units 2004-2008 By Calendar Year

Use Google or any other search web site to help you find “recall statistics” and you get a very limited list of web sites that provide useful information. Searches for other keywords like “product liability statistics,” “product safety statistics” and “recall data” yield similar results.

The new 2004-2008 WeMakeItSafer recall reports include these interesting facts:

  • Although 2004 had the fewest recalls in this time period, it had the largest number of units recalled because of one anomalous children’s jewelry recall of 150 million units.¹
  • 61% of recalls are NOT for children’s products.
  • In almost every industry, the frequency of recall announcements occur with some display of seasonality.
  • Almost $7 billion worth of products in the Computers & Electronics category were recalled.

Who knew? Well, nobody knew because analyzing recall data to make meaningful conclusions has been almost impossible until now. At WeMakeItSafer, we spent the last three years cleaning and reorganizing Consumer Product Safety Commission recall data. We also use the recall data in conjunction with other data to provide valuable insights into how recalls are affecting businesses.

The recall data have been analyzed and segmented to make understanding complex recall data amazingly easy. Each report includes charts and discusses topics such as:

  • Recall effectiveness and implications for unrecovered recalled products
  • The overall dollar value of products affected by recalls
  • Prevalence of hazards that the recalled products could cause, for example lead poisoning, choking and falls
  • Timing of recalls over calendar years
  • The number of incidents reported (with and without injuries) relative to the timing of recalls
  • Much, much, more…

WeMakeItSafer has created seven comprehensive recall information reports:

  • Overall Recall Report: All Product Categories Combined
  • Children’s Products
  • Computers & Electronics
  • Hardware, Tools & Building Supply
  • Home & Garden
  • Sports, Outdoors & Recreation
  • Motorsport & Utility Vehicles

Whether you are a company executive trying to better understand recalls, an insurance professional assessing recall risk, a recall specialist looking to identify important market segments or an investor trying to assess the impact of recalls on businesses, these reports and our individual company reports will be crucial to your successful navigation of the recall landscape. We can also customize our research and reports according to your needs, giving you meaningful insight based on recall data.

For more information and to purchase reports, please go to our Recall Statistics and Reports page, or our Company Reports page. For specific questions, please contact us directly at Reports@WeMakeItSafer.com.

¹ WeMakeItSafer’s calculation of units is taken from numbers reported in recall announcements. These figures do not match numbers reported by the CPSC in annual reports. The CPSC has told WeMakeItSafer that it does not track the number of recalled units reported in announcements but has not yet responded to our request for explanation of the calculation methods for its annual reports.


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CPSC Advice Not Practical, WeMakeItSafer Changes That

Tuesday, September 8th, 2009

 The CPSC continues to recommend that parents, childcare facility owners and school administrators check every belonging and new purchase on the CPSC website to make sure it has not been recalled.  While we strongly support the idea of looking for recalls, using the government site to do so simply is not practical.

Depending on the type and age of product, it can take five to ten minutes or more using the CPSC site to determine if a particular product has been recalled.  This is because each product must be searched individually using an archaic search system that requires review of text based lists and multiple clicks before one can be even relatively confident that the item they are checking has not been recalled.  To make sure a home is free from recalls would take about 60 hours, assuming 500 products, which is probably fewer than most of us own. (Consider that the kitchen and garage alone have well over 200 items each in tools, gadgets and appliances, and that the average baby registry checklist includes about 100 items.)

WeMakeItSafer turns the traditional search model on its head.  Rather than looking for each specific item that may or may not be in the recall database, consumers instead look through images of recalled products to see if they recognize something they own.  It seems paradoxical but, because humans are incredibly visual and capable of processing information in pictures at high rates of speed, this method is much faster, even with hundreds or even thousands of recalled products.  Thanks to an image gallery that is organized by product categories and can be narrowed by an array of criteria, one can quickly skim through potentially relevant recalls.

HompageImages

Using WeMakeItSafer it would only take one to two hours to make sure the same 500 product home is free of recalls, and the results would be much more accurate.  After consumers have conducted a complete search once, they can sign up for a bi-monthly email that includes images of newly-recalled items in order to stay up to date.  Again, being able to quickly skim through images is a much more efficient alert system than that of the CPSC, which includes lengthy text that consumers are unlikely to read.  To sign up  just send an email to InformMe@WeMakeItSafer.com .

If a consumer needs to look up a specific item, such as one they want to sell or give away, that is much faster on the WeMakeItSafer site as well.  Because we have built advanced filtering options and, again, results are returned with images, it is far faster than hunting around on the CPSC site.

The first problem we set out to fix with regard to consumer product safety was this issue regarding recalled product identification.  We could not be more pleased with the search system we developed – a true labor of love, it is our first free tool for consumers.  We hope you find it as helpful as we do.  Please let us know what you think.

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WeMakeItSafer Featured by Kids In Danger (KID)

Tuesday, July 14th, 2009

WeMakeItSafer was recently featured in a Kids In Danger (KID) blog post.  KID was formed by parents of Danny Keysar, a 16-month-old boy who died in a recalled travel yard.  Neither parents nor caregivers at the childcare center where the crib was located knew about the recall.  To date, 16 babies have died, yet the travel yards remain in circulation.

Please visit http://WeMakeItSafer.com, pick the product categories relevant to you and skim through the images to make sure you don’t own anything that has been recalled.  Please urge your friends and family to do the same.  Together, We can make the world a safer place!

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Registration Card Requirements for Durable Infant and Toddler Goods Effectively Postponed for up to Seven Months

Monday, June 29th, 2009
Product registration card

Section 104(b) of the Consumer Product Safety Improvement Act (CPSIA of 2008) requires the Consumer Product Safety Commission (CPSC) to set in place a final ruling regarding product registration cards for durable infant and toddler goods by August 14, 2009.  However, the notice of proposed rule making (NPR) published in the federal register today indicates that public comments are not due until September 14, 2009.  Furthermore, the notice proposes that the effective date for registration cards will be 180 days after the final rule is published, rather than the customary 30  to 90 days. 

Assuming the final rule is published 30 days after all comments are received, registration cards may not be required until mid-April 2010. 

For manufacturers and importers who had anticipated having to include cards and develop database tracking systems by fall 2009, this news will come as a welcome, if only temporary, reprieve.  To consumer advocates who had been promised the hope of a more effective product recall system, the news is undoubtedly disappointing.

Whether you agree or disagree with the proposals, now is the time to speak up.  The Commission is seeking comments on everything from whether a definitive list of “durable goods” ought to be made available to whether or not the prepaid return cards should follow a mandatory format.  Above is an image of the proposed cards that the Commission is currently suggesting every manufacturer adopt (click the image to enlarge).

The proposed layout is a perforated card whereby the top half can be kept by the consumers for their records and the bottom half returned to the manufacturer.  The CPSIA mandates that the cards include the model name and number and the manufacture date, which the Commission proposes can be be pre-printed or affixed with a label.

One of the questions raised is whether the proposed design is likely to improve safety.  For example, are consumers likely to keep the stub they tear off and, should they have a safety question several years later, are they likely to refer to the card rather than look up the manufacturer online or in a directory?  If the answer is no, then perhaps the double-sized, perforated card is unnecessary.  Another question the Commission asks is whether or not manufacturers should be allowed to offer registration by email rather than maintaining a webpage where consumers can register their products.

You can submit your comments to the CPSC via the regulations.gov website, here.  Please note that your name, contact information and comments, as submitted, will be printed for public view.

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WeMakeItSafer.com is LIVE!

Monday, June 22nd, 2009

LogoWeSeal  I am very pleased to announce that http://WeMakeItSafer.com  is LIVE!  

Please go on in to check it out and let us know what you think – feedback links at the top of every page.  Also, be sure to follow us on twitter @WeMakeItSafer (http://twitter.com/wemakeitsafer) as we will be continuously rolling out new content and features.

Please tell all your friends – especially those with kids at home or those with senior family members living alone – to stop by the site and peruse our simpler than ever recalled-product gallery to make sure there aren't any items in their homes with safety defects.  Unfortunately, nearly everyone owns dangerous, recalled products without knowing it.

And, don’t forget – never buy or sell another secondhand item without running a search at WeMakeItSafer.com first.  Together, we can make the world a safer place.

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Company Costs of a Product Recall: Incentives to Fix or Ignore Recall Effectiveness Problems (Summary)

Monday, October 13th, 2008

When I speak with
consumers about possible ways to make locating recalled products easier for
manufacturers, many balk at the idea, positing that companies would never have
any incentive to improve recall effectiveness. 
For these individuals, the belief is that companies would rather not do everything possible to locate and
retrieve defective products in order to avoid incurring repair and replacement
costs or stirring up media attention. 

What these individuals correctly
assume is that product recalls are expensive to conduct.  What they are missing, however, is that there
are many indirect expenses that may outweigh any incentives to hide or slow a recall.  In my article, Company Recall Costs: Incentives to Fix or Ignore Recall Effectiveness Problems, I identify many of
the direct and indirect costs of recalls and discuss whether the influence is
likely to be positive or negative with respect to a company’s propensity to act
responsibly – that is, to do everything possible to retrieve defective products,
even if that means doing more than what the law requires. 

You can read the full article by
clicking the link above.   A summary of
my main points, and excerpts from my conclusion are presented here.

  • Direct costs include the cost of implementing the recall, lost inventory and reversed sales.

  • Direct costs tend to increase as recall
    effectiveness increases.

  • Indirect costs include government
    fines, product liability claims and lost future sales; the last of which is driven by brand-image and Corporate Social Responsibility (CSR) effects.

  • Indirect costs tend to decrease as recall
    effectiveness increases.

 

Company Recall Costs and Incentives

The chart above summarizes recall
costs and whether each carries a positive or negative incentive for companies
to ensure the recall is effective.  Although
quantifying these cost incentives is difficult and goes beyond the scope of the
paper, I do offer this small bit of analysis:

 
Mattel cost pie PNGMattel Stock PricesIn the fall of 2007 Mattel faced
several recalls in a short period of time due to loose magnets and lead paint
violations.  Even though the fraction of
Mattel’s products that were affected was very small, the company suffered
significant impact on its stock price. 
Given that Mattel had $5.5 billion in annual sales at the time, and
that the then-current direct recall costs were only $69 million, something else
must have been driving the bulk of the impact.[1]  Shareholders and analysts were building in
expectations regarding the recalls’ impact on Mattel’s future sales, which are captured
in direct costs.

 
Therefore, while it may seem
counterintuitive, when all costs are considered, companies have an incentive to
implement the most effective recalls possible; that incentive being improved
financial performance.  It may be the case that companies that do
not go the extra mile to locate defective products and communicate with
consumers quickly are budget constrained, but more likely they are too focused on direct costs.  

 

[1] Mattel 10-Q, September, 2007

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US Product Recall System is Ineffective…Still?

Thursday, September 4th, 2008

Every year millions of people are
injured or killed in product-related accidents. 
In 2006 (the year before
recalls regained the spotlight) product-related incidents in the US alone
injured 33.1 million people and killed an additional 27,000.1 That same year, in attempt to quell those numbers, the CPSC recalled 471
products, accounting for 124 million product-units.2  35% of those recalls were for children’s
products.3 While
implementing so many recalls may be helpful, as the numbers of injuries and
deaths show, the system is not as effective as it needs to be.

The recent passing of the
Consumer Product Safety Improvement Act of 2008 (CPSIA) on August 14th takes steps toward
making consumer products sold in the US safer. 
Some of the new rules include:

  • Bans (or near bans) on phthalates and lead in
    children’s products,
  • Requirements for third-party testing on children’s products,
    and testing on all regulated imports,
  • Increases in the number of mandatory safety standards, and
  • Steeper fines for violations, now $100,000 – $15
    Million (previously $8,000 – $1.8M)

All of these are important
measures that should help to increase the safety of products sold in the
US.  But what about those products that
do slip through the cracks or are the result of honest mistakes – the products
that are later recalled?  

As the term implies, products
that are “recalled” are supposed to be retrieved from consumers and returned to
manufacturers, fixed or destroyed.  In
reality, relatively few recalled-products are ever recovered.  On average, manufacturers can only account
for about 20% of the recalled products that have already left their facilities,
leaving up to 80% in homes, schools, childcare facilities and offices around
the country.

The 2008 CPSIA does make some changes to Section 15, the portion of the 1972 Act governing recall procedures, in attempt to
improve recall effectiveness.  As
discussed more thoroughly in my previous blog, Brief Overview of US Product Recall System
- Old and New, changes include:

  • Requirements to post recalls on websites of
    manufacturers, retailers, distributors and licensors,
  • Notifications of recalls to State and local health
    authorities,
  • CPSC discretion over the type(s) of remedy that may be
    offered in a specific recall, and
  • Announcements of recalls on TV or radio, and in
    languages other than English, when the CPSC determines this could reach
    additional affected populations not otherwise reached.

The 2008 CPSIA also aims to increase recall effectiveness by
requiring manufacturers to include product registration cards with durable
infant and toddler goods such as cribs, strollers, high chairs, bath seats,
play yards and activity centers.  In addition, manufacturers will be required to stamp certain children's products with a permanent tracking number that will allow consumers to ascertain information such as when and where the product was produced.

While I think that each of these
measures is a step in the right direction, I am skeptical that they will have a
significant impact on recall effectiveness. 
For example, many companies already list recalls on their websites, but
consumers only click on the “Recalls” links when they suspect a
problem.  In other words, recall links
are most often visited by the 20% of consumers who already know about a
particular recall, not the up to 80% who don’t. 

Similarly, while requiring registration
cards seems like a good idea, cards currently only have about a 15-30% response
rate.  The new rules say that
registration cards must include a statement that customer information will only
be used to contact the customer in the event of a recall, which may increase
response rates, but it will be a long time before we know for sure.  Cards are not required for durable infant and
toddler goods until August 2009, after which the CPSC has up to four years to
determine whether the cards have been successful in increasing recall
effectiveness.  Only after such
determination will the CPSC consider requiring registration cards on other
children’s products. 

Whether the registration cards prove successful or not, they will only help protect the original owner of the product.  If the item is sold to another party or donated to charity, the original owner may not be able (or willing) to contact the current owner.

Similarly, while labeling children's products with a tracking ID will certainly make it easier for consumers to know whether their version of a particular product has been recalled, it still requires the consumer to know about the recall before they will check.

I do think including other
languages and reaching certain populations by TV or radio could be very
helpful, but will require exemplary implementation on the part of the
CPSC.  The circumstances around which
such communication will be required are not outlined in the 2008 CPSIA.  One cautionary note is that widespread media
advertising of recalls, if overdone, could actually reduce recall effectiveness
as consumers begin to tune out the barrage of announcements, a phenomenon
witnessed in the UK.

Perhaps paradoxically, as the
number of regulations designed to make products safer grow, we may see
an increase in the number of product recalls, especially at first while new
testing systems are being developed.  This only
makes getting the recall system right that much more important.  The steps taken through the 2008 CPSIA are good, but we still have a lot of work to do.

Reference Materials

Consumer Product Safety Act of 1972

Consumer Product Safety Improvement Act of 2008

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Brief Overview of the US Consumer-Product Recall System – Old and New

Tuesday, September 2nd, 2008

Recall Process
In the United States, more
than 15,000 types of consumer products, not including food, drugs and vehicles,
fall under the jurisdiction of the Consumer Product Safety Commission (CPSC),
the government agency whose job it is to protect the public “from unreasonable
risks of injury and death associated with consumer products.”[1]  Maintaining the product recall system is just
one of the activities conducted by the CPSC to achieve this goal.

   

Rules related to product
recall are detailed under Section 15 of the 1972 Consumer Product Safety Act
(CPSA), and have been recently revised by the Consumer Product Safety
Improvement Act of 2008 (CPSIA), which was signed into law on August 14, 2008. What
follows is a brief overview of the recall process, including a discussion of
the salient changes.

 

Under the 1972 CPSA, any
company that manufactures, distributes, imports or sells consumer products in
the US must notify the CPSC “immediately” (defined in the CPSC recall handbook
as within 24 hours) if it obtains information that reasonably suggests a
product

1)  Fails to
comply with an applicable consumer product safety rule or voluntary standard upon which the Commission has relied under the Consumer Product
Safety Act,

2)  Contains a defect that could create a
substantial product hazard to consumers, or

3)  Creates an unreasonable risk of serious
injury or death.

 
The 2008 CPSIA does not fundamentally
change these guidelines, but does expand them by stating companies must also
comply with “any other rule, regulation, standard, or
ban under this [2008] Act or any other Act enforced by the Commission.”

The information regarding
potential hazards that companies must report can come from a number of sources,
such as the company’s own testing or from customer complaints.  If a company fails to report under the above-listed
circumstances, the CPSC could, under the 1972 CPSA, impose fines from $8,000 up
to $1.8 million (PV). The 2008 CPSIA increases potential fines to $100,000 up to $15
million.


After a company files a
report, the CPSC goes through an evaluation process in order to make a
determination on the product’s level of defect or risk.  This evaluation process can take several
weeks, and in the end, the company may not agree with the final conclusion or
the wording that is presented to the public. 
A company can avoid CPSC determination by implementing a “voluntarily”
recall within 20 days of the company’s initial notification to the CPSC.  This process, referred to as Fast Track,
speeds implementation of the recall, and gives the company more control over
what and how information is presented to consumers.  The 2008 CPSIA does not appear to change the
Fast Track guidelines.

 
Once a recall is in effect,
the 1972 CPSA does not specify any requirements with regard to the level of
advertising or customer notification other than mailing notices to known
customers and distributors or retailers, and conducting joint press-release with
the CPSC.  The CPSC does review a recall
plan proposed by the company, which often includes placing notices such as
signs in retailer locations.  However, any
additional efforts to reach customers is at the discretion of the company recalling
the product.

 
The 2008 CPSIA increases notification
requirements by now specifying that a company is:
‘‘To give public notice of the defect or failure to comply,
including posting clear and conspicuous notice on its Internet website,
providing notice to any third party Internet website on which such
manufacturer, retailer, distributor, or licensor has placed the product for
sale, and announcements in languages other than English and on radio and
television where the Commission determines that a substantial number of
consumers to whom the recall is directed may not be reached by other notice.”  State and local health officials are also to
be notified under the new rules.

 
In addition, the 2008 CPSIA
gives the CPSC more authority over a company’s recall action plan.  For example, the CPSC can now require that a
company give a refund, replacement and/or repair rather than allowing companies
to choose which remedy to offer consumers. Further, if the CPSC determines the
action plan is not being followed or is ineffective, it can revoke it’s approval
of the plan.

Source Materials:

Consumer Product Safety Act of 1972

Consumer Product Safety Improvement Act of 2008

CPSC Recall Handbook

CPSC Website 

[1] Recall
Handbook, “A Guide for Manufacturers, Importers, Distributors and Retailers on
Reporting Under Sections 15 and 37 of the Consumer Product Safety Act and
Section 102 of the Child Safety Protection Act and Preparing for, Initiating
and Implementing Product Safety Recalls,” 
CPSC 1999

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