Tim Brown, MAS, PPAI Product Responsibility Manager How To Handle A Recall Tim Brown, MAS, PPAI Product Responsibility Manager

This information is being furnished by PPAI for educational and informational purposes only. The Association makes no warranties or representations about specific dates, coverage or application. Consult with appropriate legal counsel about the specific application of the law to your business and products.

Agenda Why a recall strategy Strategies to mitigate the risk of product recalls Develop a plan for if or when a product is recalled Steps to take when a recall becomes necessary Much of this information is sourced from the CPSC Recall Handbook. Review it online for more information at www.cpsc.gov//PageFiles/106141/8002.pdf

Product Recalls…It’s all about preparation

Consumer Product Safety Commission The U.S. Consumer Product Safety Commission (CPSC) has jurisdiction over more than 15,000 kinds of consumer products used in and around the home, in sports, recreation and schools including: Appliances Clothing Electronic / Electrical Furniture Household Children's Products Lighting / Lighter Outdoor Sports / Exercise

CPSC Comment On Recalls “No company likes to recall one of its products, but when a safety problem makes a product recall necessary to prevent injuries and save lives, it benefits everyone to move quickly and effectively.” - CPSC Recall Handbook RECALL HANDBOOK

Benefit of Recall Readiness Companies who develop a product recall plan before a product incident occurs are more able to move quickly and effectively in the event of a recall. Save lives Prevent injuries (or further injuries) Limit damage to brand Your company’s brand Your customer’s brand Decrease impact on the bottom line

Who Is Responsible? Recall responsibility impacts companies that: Manufacture Import Distribute Retail Sell Consumer Products Promotional products generally fall under consumer products

What Should You Do? Anticipate problem products You have an obligation to continuously survey the market Websites Saferproducts.gov Social media Develop a system to maintain and review complaints, warranty returns and other critical analyses of products

Reporting Requirements Outlined in the Consumer Product Safety Act Section 15 Section 37 Child Safety Protection Act Section 102

Section 15 A firm must notify the CPSC immediately if a product: Fails to meet a consumer product safety standard or banning regulation Contains a defect which could create a substantial hazard to a consumer Creates an unreasonable risk of serious injury or death Fails to comply with a voluntary standard which the Commission has relied on, under the CPSA

What and Where To Report Section 15 Must file a report with the CPSC Office of Compliance Telephone: 301-504-7520 Mail: 4330 East West Hwy, Bethesda, MD 20814 Electronically: www.cpsc.gov Fax: 301-504-0359 Email: sect15@cpsc.gov Designated contact with decision making authority, knowledge of product and reporting requirements Identify all stakeholders and assign roles in advance to avoid confusion later Recall Coordinator will lead the recall process and be responsible for: Collecting data Leading the recall team Assembling resources Overseeing the recall process Communicating with management Liaison with authorities Review product line Institute product identification system

Information Needed Section 15 Description of the product Name and address of the company (manufacturer, distributor, importer or retailer) The possible product defect or unreasonable risk of serious injury or death Nature and extent of the injury or possible injury associated with the product Name, address and telephone number of the person informing the Commission A timetable for providing information not immediately available

When To Report Section 15 Must report “immediately” Within 24 hours of obtaining the information Encourages to report potential substantial product hazards even while own investigations are continuing May conduct own investigation for 10 working days Commission will presume that all information has been received and considered at the end of the 10 working days The CPSC encourages companies to report potential hazards even while their own investigations are continuing Reporting a product to the CPSC does not automatically trigger a recall

Evaluation of Report Commission will evaluate whether or when an incident should have been reported Evaluation based on what the company actually knew about the hazard posed by the product or on what a reasonable person should have known about the product hazard A company is deemed to know what it would have known had it exercised due care in analyzing reports of injury, consumer complaints, warranty of returns, reports of experts, etc. Reporting a product to the Commission under section 15 does not automatically mean that the Commission will conclude that the product creates a substantial product hazard or that corrective action is necessary.

Confidentiality of Reports Section 15 The Commission is prohibited to release information unless a remedial action plan has been accepted by the firm in writing, a complaint has been issued or the reporting firm consents to the release The reporting firm must mark “confidential” on the report if the information submitted is trade secret, confidential commercial or financial information

Criteria For Substantial Product Hazards Pattern of defect Number of defective products distributed in commerce Severity of risk Likelihood of injury

Hazard Priority System Class A Hazard Highest level of attention Risk of death, grievous or serious injury or illness is likely or very likely Immediate action must be taken to identify and notify consumers, retailers and distributors having the defective product Remedy the defect through repair, replacement, refunds, etc. Class B Hazard Risk of death or grievous injury or illness is not likely to occur, but is possible, or when serious injury or illness is likely or moderate injury or illness is very likely Class C Hazard Risk of seriously injury or illness is not likely but is possible or when moderate injury or illness is not necessarily likely, but is possible

Fast Track Product Recall Program Expedites recall process Within 20 working days of filing a potential product defect report, the CPSC can implement a consumer-level voluntary recall Allows the company and the Commission to create an immediate corrective action with out spending time and other resources to investigate Firms that file Section 15 reports may wish to use an alternative procedure that the Commission has established to expedite recalls

Fast Track Product Recall Program Provide all information required for a full report Request to participate in this program Submit a proposed corrective action plan with sufficient time for the Commission to analyze any proposed repair, replacement or refund and to evaluate all notice material before implementation of the voluntary recall

Reporting Requirements – Section 37 Must notify the Commission immediately if a product: Is the subject of at least three civil actions filed in federal or state court Each suit alleges the involvement of the product in death or grievous bodily injury During two-year periods, each of the three actions result in either a final settlement involving the manufacturer in a court judgment in favor of the plaintiff Manufacturer is involved in the defense of or has notice of each action prior to the entry of the final order

Information Needed for Report Section 37 Name and address of the manufacturer Model and model number A statement as to whether the civil action alleged death or grievous bodily injury and the nature of injury A statement as to whether the case resulted in a final settlement or judgment Name and case number and the court in which is was filed

When and Where To Report Section 37 30 days after judgment or final settlement in the last of the three lawsuits In writing to the Office of Compliance, U.S. Consumer Product Safety Commission

Confidentiality of Reports Section 37 Commission may not disclose to the general public any information reported under Section 37 (Unlike Section 15) Reporting under Section 37 is not an admission of the existence of unreasonable risk of injury or defect, product hazard, or any other liability Section 15 - The Commission is prohibited to release information unless a remedial action plan has been accepted by the firm in writing, a complaint has been issued or the reporting firm consents to the release

Reporting Requirements Section 102 Child Safety Protection Act requires companies to report certain choking incidents if: A child, regardless of age, choked on a marble, small ball, balloon or small part; and As a result of the incident, the child died, suffered serious injury, ceased breathing for any length of time or was treated by a medical professional

Information Needed For Reporting Section 102 Name and address of the child who choked Name and address of the person who notified the firm of the incident Any resulting injuries or medical treatment Information about any changes made to the product involved or its warning labels Details of any public notice or other corrective action planned

When and Where To Report Section 102 Must be filed within 24 hours of obtaining the information Must be filed with the Office of Compliance By Mail By Telephone: 301-504-7520 Telephone reports must be followed with written confirmation) By Fax: 301-504-0359

Confidentiality of Reports Section 102 Reports receive the same confidentiality treatment as information submitted under Section 15

Reporting Requirements (Recommendations) Companies should develop a system for maintaining and reviewing information that might suggest a product defect or unreasonable risk of injury or death Information should include: Consumer complaints Warranty returns Insurance claims or payments Product liability lawsuits Reports of production problems Product test reports Design evaluations / risk assessments

Identifying A Defect What is the utility of the product? What is the need for the product? What is the nature of injury that could be caused? What is the population exposed to the product? What is the Commission’s experience with the product? What other information sheds light on the product and patterns of consumer use?

Preparing for a Product Recall Identify the defect that caused the hazard Identify what caused the product defect Locate the unsafe products and find out how many there are Did the product fail to comply with government safety regulations? Inform the government or appropriate regulatory body Discontinue production and shipment

Preparing for a Product Recall Notify distributors to stop selling the product Press Release announcing a recall Establish a toll free telephone service to handle expected calls Estimate the cost of the product recall Provide reports of the progress of the recall to the Commission Upgrade quality control procedures to avoid similar situations in the future

Objectives of a Recall Locate all defective product as quickly as possible Remove defective products from the distribution chain and from the possession of consumers To communicate accurate and understandable information in a timely manner to the public about the product defect, the hazard, and the corrective action.

Communicating Recall Information A joint news release from the CPSC and the company A video news release to complement written news release Targeted distribution of the news release and a toll free number for consumers to call to respond to the recall Information on company website

Communicating Recall Information A national news conference and/or television or radio announcements Notice to distributors, retailers, sales representatives Social Media! Incentives to consumers to return the product

Recall News Releases Written and Video Must include the following: Name and location of the recalling firm Name of the product Number of products involved Description of the hazard Number of deaths, injuries and incidents Detailed description of the product including model numbers, colors, sizes, and labeling A line drawing or photo of the product Major retailers or where and when the product was sold and for what cost Complete instructions for consumers on how to participate in the recall

Recall Poster Brief and eye-catching Describe the hazard and tell consumers what to do Use color to make the poster stand out Use a font, size, and color that contrasts with the background Include a phone number Include a “post until” date [must be at least 120 days from recall announcement] Consider tear off sheets so the consumer can take the information home Recommended to be 11 x 17 inches, but can not be smaller than 8.5 x 11 inches

Designating a Recall Coordinator Knowledge of the recall procedures Ability and authority to function as the central coordinator for receiving and processing all information Responsible for keeping the company’s CEO informed about the product recall Responsible for making decisions about initiating product recalls Authority to involve appropriate departments and offices within the firm in implementing a product recall Responsible for serving as the company’s primary liaison with the CPSC

Records Maintenance Records of complaints, warranty returns, insurance claims and lawsuits Production records Distribution records Quality control records Product registration cards Tracking Labels

Tracking Labels Permanent, distinguishing marks on the product (to the extent practicable) and packaging manufactured as of August 14, 2009 Manufacturer or private labeler name Location of production Date of production Other information (batch, run number, sources) The overall purpose is to enhance recall effectiveness Tracking labels will provide information to help a manufacturer target the problem and initiate an effective corrective action program

Consumer Product Safety Database Allows consumers to submit reports of harm or risk of harm Allows consumers to search for safety information on products they own or may consider buying Helps CPSC identify product hazards quicker and provide consumers with safety information www.saferproducts.gov

Resources PPAI: www.ppai.org PPAI Product Corporate Responsibility: www.ppai.org/inside-ppai/corporate-responsibility/ Tim Brown, MAS timb@ppai.org @PromoSafetyGuy Anne Lardner-Stone AnneL@ppai.org Consumer Product Safety Commission: www.cpsc.gov ; www.recalls.gov CPSC Recall Handbook http://www.cpsc.gov/BUSINFO/8002.html http://www.saferproducts.gov/About.aspx UL: www.ul.com/consumerproducts