The U.S. Consumer Product Safety Commission (CPSC) may be working from home but its activity and enforcement efforts remain as energized as ever. The Agency’s critical vigilance during the COVID-19 crisis, including its focus on counterfeit COVID-19 products flooding the market place. On March 23, the agency tweeted that its staff are teleworking “to the maximum extent possible” and still coordinating product recalls. The agency also highlighted recent efforts by U.S. Customs and Border Patrol to seize altered and prohibited cleaning products and fake COVID-19 treatment kits and continues to publicize the dangers of counterfeit goods.
The agency’s commitment to working hard during this time of “sheltering in place” and “social distancing” is consistent with the more aggressive stance that the CPSC has recently taken against products that it believes pose safety hazards, including tougher penalties and increased use of “unilateral” press releases for companies whose products the CPSC believes pose serious safety risks.
This approach is also likely in response to recent criticism that the agency has not been active or punitive enough. Under outgoing CPSC Chair, Ann Marie Buerkle, product recalls fell to their lowest point in 16 years, and the number of companies facing civil penalties fell too (from 6 in 2016 to 0 in 2019). More recently, the CPSC has faced criticism on grounds that it failed to act quickly or aggressively enough to address a rash of fatal tipover incidents involving children’s furniture.
The recent trend of “unilateral” press releases issued by the CPSC marks a return to increased enforcement efforts. Although the CPSC has the authority to file a lawsuit to compel a company to conduct a recall, the agency’s longstanding preference is to make a joint recall announcement (via official press release) with the affected company after CPSC staff have vetted the company’s proposed remedy. And in the rare case of a forced recall lawsuit, a settlement often ensues that permits the company to avoid the recall.
In the CPSC’s infancy in the 1970s, the agency often issued press releases warning of hazards even if the company disagreed with the need for a recall (hence the “unilateral” moniker) but since then, the practice had been little used – until Commissioner, Robert Adler, became acting Chair on October 1, 2019. Since that time, the CPSC has issued three unilateral press releases – one warning of dresser tipover hazards, one warning of suffocation risks posed by infant inclined sleepers, and one warning of fire risks associated with hoverboards. In each case, the press release made clear that the CPSC disapproved of the company’s decision not to recall the product (in the case of the hoverboard product, for example, the CPSC stated that the company “refused” to make a recall).
These unilateral press releases are notable for several reasons. First, the variety of products and hazards involved suggest that the newly invigorated CPSC does not intend to focus its enforcement attention on one particular product or industry. Second, a unilateral announcement puts enormous pressure on a company to conduct a recall, since the court of public opinion rarely acquits a company facing harsh scrutiny from presumptively neutral regulators. Third, the CPSC may seek civil penalties of up to $15 million for any related series of violations – an amount that Chairman Adler once called a “rounding error” for many of the multi-billion-dollar companies the CPSC regulates.
As a result of all this, it is important that companies not overlook potential product compliance issues, even as they scramble to adjust to new and unexpected COVID-19 realities. Indeed, the crisis may itself generate new risks. For example, if your company has to substitute suppliers on an interim basis because your primary suppliers are experiencing COVID-19 related delays, the exigency of the situation should not excuse the need to obtain from the interim suppliers representations of compliance, including supporting documentation, for products subject to CPSC jurisdiction. It is likewise still important to review substitute and interim supply contracts to ensure that product compliance and liability risks are appropriately allocated. Finally, companies should review their internal product safety and hazard evaluation, compliance, and reporting programs to ensure that backup protocols are in place in case a key content owner is out of the office for an extended period of time.
Foley has extensive experience designing and augmenting product safety and compliance programs across a wide variety of industries. We would be happy to review your company’s existing plans in light of COVID-19 exigencies and advise on next steps. For more information, please contact your Foley relationship partner.
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