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

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