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Understanding Product Recalls

09.15.2014

After a product enters the marketplace, sometimes it is discovered that the product has a defect that poses a risk to the user. The United States and many other nations have established laws and regulatory bodies aimed at removing dangerous products from the marketplace. The most common method of removing those products is through a product recall. Manufacturers, distributors, and retailers must understand their obligations once the potential for harm from a product has been determined.

In the United States, numerous federal agencies are charged with the duty of assisting manufactures, distributors, and retailers in removing dangerous products from the marketplace. Manufacturers, distributors, and retailers often have a duty to notify the appropriate federal agency once the potential for a dangerous product arises. Failure to give proper notice to these federal agencies can result in substantial fines and penalties. Further, if it is determined that a product recall is warranted, manufactures, distributors, and retailers may be under a duty to recall those products to remove them from the marketplace.

Determining which federal agency has jurisdiction over a particular product’s safety is the first step. What follows is a summary of federal agency guidelines for the most common product recalls.

Consumer Products – U.S. Consumer Product Safety Commission

The U.S. Consumer Product Safety Commission (CPSC) is the federal agency responsible for protecting consumers from dangerous consumer products. The CPSC has jurisdiction over 15,000 different types of products used in homes, schools, and for recreation (consumer products). A manufacturer, importer, distributor, or retailer who has reason to believe that a consumer product has a defect that poses an "unreasonable risk of serious injury or death" has an obligation to notify the CPSC of such potential "immediately". This timeframe is interpreted by the CPSC to be within 24 hours after obtaining information that the product may pose such risk. The reporting party does not have to have substantial proof that a defect exists before the duty to report is triggered. A mere indication of a dangerous defect is enough to require a report even though a full investigation later reveals no defect exists. Failure to report the potential defect within the specified time period can result in significant fines and penalties against manufacturers and other entities in the distribution chain.

The reporting party must then make a decision whether to conduct a voluntary recall; in the absence of such decision, the CPSC can order a recall of the product. Typically, a consumer product recall involves providing notice to the public of the potential defect (news release, social media, posters at the point of sale, letters to consumers and retailers, etc.). The reporting party may also be obligated to repair or replace those recalled products. The reporting party also has an obligation to maintain specific records regarding the recall and provide periodic updates about the recall to CPSC.

Food and Drugs – U.S. Food & Drug Administration

Responsibility for the safety of food, drugs, and certain other products falls to the United States Food & Drug Administration (FDA). The FDA is responsible for regulating the safety of food products, tobacco products, dietary supplements, prescription and over-the-counter drugs, vaccines, cosmetics, and veterinary products.

The FDA classifies product recalls into three broad categories. Those include: Class 1 - recalls for products that could cause serious injury or death; Class 2 - recalls for products that might cause temporary or medically reversible health problems; and Class 3 - recalls for products that are unlikely to cause injury or illness but that still violate FDA regulations. If a party believes that its product violates FDA regulations, it should notify the FDA immediately. That party is also required to provide periodic updates to the FDA.

An FDA recall can be initiated either by the reporting party itself, or it can be mandated by the FDA if the reporting party refuses to withdraw the product from the market. Once initiated, a recall begins by notifying customers of the product name and other information as well as the reasons for the recall. The recall is also publicly announced by the FDA through news and social media sources.

Automobiles and Auto Parts – The National Highway Transportation Safety Administration

The National Highway Transportation Safety Administration (NHTSA) is the federal agency having jurisdiction over safety of automobiles and auto parts. As with consumer products and drugs, NHTSA can order a recall of automobiles or automobile parts that have safety-related defects or that otherwise do not meet federal safety standards. If a manufacturer has reason to believe that a safety defect exists, the manufacturer is required to report that information to NHTSA within 5 working days. Examples of safety defects include broken or cracked wheels, accelerator controls that stick or break, and seats or seat backs that fail. Examples of defects that are not safety related include air conditioner and radio malfunctions and paint and rust problems. Failure to report safety defect information to NHTSA can result in substantial fines and penalties.

If a recall is required, NHTSA will coordinate with the reporting party in notifying consumers of the defective automobile or part and will assist in removing the products from the marketplace. Periodic updates about the progress of the recall must be given to NHTSA.

Manufacturers, importers, distributors, and retailers all may have an obligation to notify the appropriate federal agency if it is determined that a product defect may pose a potential risk for harm. Failure to timely provide the appropriate notice can result in substantial fines and other penalties. These parties must monitor the products in the hands of consumers, pay attention to warranty claims and complaints from consumers, and investigate any facts that may indicate a dangerous product. The attorneys at Koley Jessen are well versed in conducting product recalls and can assist manufacturers and others in the chain of product distribution in accessing whether a product recall is necessary.

by John M. Lingelbach

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