In the September issue of PPB, we witnessed an important milestone in Michelle’s learning curve as a novice compliance manager for Golfster Promo as she successfully managed a pre-shipment quality inspection of a large order for an important client. In this issue, we catch up with Michelle as she learns the horrible, heart-stopping news about a huge order of defective promotional golf visors for children.
The bad news came in an e-mail from Golfster’s client, which is the leading promoter of kids’ golf leagues across the United States. Michelle’s company manufactured 150,000 high-density foam golf visors with the golf league’s logo screen printed on the visor’s bill. The visors were direct-shipped two months ago to more than 3,000 golf shops and courses across the country as part of a national “Get Kids to Golf” campaign. Each child under 12 years of age who signed up with his or her local golf league received a free golf visor.
As part of its regular product safety audit program, a national golf retailer collected samples of the visors it received and sent them to its third-party lab for testing to verify compliance with applicable CPSIA (Consumer Product Safety Information Act) requirements for children’s products. Unfortunately, the lab’s tests came back with the shocking results that the bright yellow ink used for the logo contained more than 950 ppm of total lead—well in excess of the CPSIA’s limit of 90 ppm of total lead in paints and surface coatings for children’s products. Michelle then immediately overnighted several samples of the visor to her own lab for rush verification testing, and three days later she was notified that the visors indeed contained excessive amounts of lead in the imprints. These visors failed testing twice for high lead, and something had to be done before a young child suffered serious harm or death from lead poisoning.
Michelle was in a panic. She went back to her file for this order and discovered that she had made a crucial error by accepting the factory-supplied test reports instead of spending the $100 or so to have the visors independently tested by her own lab. Regardless of whether the Chinese factory did a “bait-and-switch” on the inks or contaminated the ink with other inks used in the facility, Michelle was in no position to figure out what went wrong at the factory 10,000 miles away. She knew she had a terrible situation on her hands and she had to act quickly. There was no question in her mind that Golfster Promo now had to launch the first product safety recall in its 24-year history.
As her bosses needed to do damage control with their clients, Michelle was left to fend for herself in conducting the recall. She knew enough that the high lead content in the visors violated the Federal Hazardous Substances Act (now a part of CPSIA) and several state lead laws, including California’s Proposition 65 and the Illinois Lead Poisoning Prevention Act.
In a moment of clarity, Michelle recalled seeing a guide for product responsibility best practices on the PPAI website and she quickly pulled it up on her computer screen. There she learned that there are several steps she should take to conduct an effective product recall:
- Identify the product defect or violation that would give rise to a safety recall; Michelle has already done this through the tests confirming the high lead content in the inks;
- Notify the Consumer Product Safety Commission (CPSC) immediately and work with them to determine if a recall is necessary; if a recall is indeed determined by the CPSC to be the proper course of action, then Michelle can rely on the CPSC’s guidance in properly conducting the recall;
- Prepare for a recall by developing a recall plan; unfortunately, Michelle never got around to creating a recall plan because she was still learning the basics of her job. Michelle will now have to quickly develop a recall plan to get the visors out of consumers’ hands (and off their heads) and back into her warehouse;
- Communicate recall information to the public, clients and retailers; Michelle will now need to work with the CPSC to develop a joint press release, create a recall poster, set up a toll-free recall hotline number and web page, and provide scripts for staff to use when fielding questions from consumers and the press;
- Manage appropriate remedies to replace the product for consumers and retailers; Michelle will have to create a plan to motivate consumers to return the defective visors to Golfster, provide consumers with substitute products, and devise an appropriate method for the destruction and disposal of the defective visors; and
- Compile and maintain all of the recall records relating to the product, consumer complaints and remedies provided to consumers for operational and legal reasons.
Using the best practice guide as her checklist, Michelle jumped into action. She first notified the CPSC of her situation with the visors and how they contained high levels of lead in the ink. Michelle did this because her timely notification was required by CPSC regulation. Within a few days after Michelle’s notification, the CPSC’s assigned compliance officer determined that the visors should be recalled on a nationwide basis. Using a retail customer list provided by the client, an e-mail notice was sent to all 3,000 golf shops and golf courses to advise them of the pending recall, to instruct store managers to remove the visors from public distribution and request that they quarantine the visors until further directions were issued by Golfster Promo.
In the following week, the wording for a joint press release was developed with the CPSC, and Michelle created and printed a product safety recall poster for express delivery to all of the golf shops and golf courses that received the giveaway visors to post at their locations. In addition, a web page describing the recall and containing a set of FAQs was created for all of the golf shops and golf courses to post on their websites to publicize the recall and induce consumers to return the visors in exchange for a new golf cap that promoted the junior golf league.
Over the course of several weeks, more than half of the visors were successfully returned to Golfster’s warehouse where they were securely quarantined for proper destruction. Attractive new golf caps were sent as free replacements to consumers who responded. The replacement caps were well-received by the consumers because of the higher perceived value and they also greatly contributed to the high return rate of the defective visors.
Although the total costs for the recall approached $1 million, including all the expenses for attorney and consultant fees, printing and overnight express shipping, postage refunds to consumers, the cost of the replacement caps, the destruction of the defective visors, and a sizable refund to the client, Golfster’s reputation was damaged in incalculable ways that far exceeded the recall’s hard costs. Despite the honorable manner in which Golfster conducted itself to shield its golf league client from bad press and potential liability resulting from the ordeal, the client, and several others, informed Michelle’s bosses that they would no longer do business with them because the recall damaged the trust and confidence that they previously had in Golfster Promo.
Poor Michelle felt like this was all her fault. She wanted to crawl under a rock for a year to let this mess, like a horrible storm, blow over. If her bosses let her keep her job, she vowed that she would no longer accept test reports from her suppliers and would instead conduct third-party testing on her own to verify compliance. Ben Franklin’s axiom, “An ounce of prevention is worth a pound of cure,” never rang truer to Michelle.
Leeton Lee has been in the product safety and compliance industry for 18 years, starting as in-house legal counsel at The Walt Disney Company where he worked for seven years and helped to form Disney’s industry-leading Corporate Product Integrity Department and managed the company’s legal matters for its worldwide product safety and liability program. As an attorney for approximately 25 years, he has extensive experience in regulatory compliance and product safety, namely in toys, children’s products, promotional products and apparel. In addition to working at Disney, he has performed associate general counsel duties at industry leaders Sega Gameworks and Equity Marketing (aka EMAK Worldwide). He is currently vice president of regulatory compliance and general counsel at drinkware supplier ETS Express, Inc. in Oxnard, California. He was recently appointed to PPAI’s Product Responsibility Action Group (PRAG).
>>It’s Your Business To Know
“I dunno” is no excuse for errors where product safety is concerned. Check out PPAI’s website at www.ppai.org/productsafety for dozens of resources including product guides, live and on-demand webinars, articles and other documents and links designed to help educate distributors and suppliers about product safety requirements and compliance. Click on Compliance In A Box to find PPAI’s new guide to recalls as referenced in this article.