Are You Guilty Of Undue Influence?

Part of my job over the past few years has been to navigate the ever-changing laws pertaining to the Consumer Product Safety Commission (CPSC), Consumer Product Safety Improvement Act (CPSIA), Prop 65 and others, and communicate the information to our employees. Most employees lose interest in these educational conversations once I mention the word “compliance” or “third-party testing.” Getting their attention back is easy—all I need to do is promise that my lab connections will make sure that all products pass regardless of what supplier they choose. I am able to make these promises because I assure my lab contacts that they will get all of our business if they pass products for me, and if they don’t, I threaten to pull our company business and go to another lab. I can do that, I have the power … or so I thought. It turns out that threatening these lab employees to pass our required tests is an example of exerting undue influence.

What Exactly Is Undue Influence?

The website businessdirectory.com defines it as “mental, moral or physical domination (even if natural or right) that deprives a person of independent judgment and substitutes another person’s objectives in place of his or her own. Exercise of undue influence is characterized often by excessive insistence, superiority of physical power, mind, will or pressure applied due to authority, position or relationship in relation to the strength of the person submitting to it. Consent obtained for a contract, relationship or transaction is voidable if it can be shown that an unfair advantage has been taken of an involved party. In dealings between parent and child, husband and wife, attorney and client, or doctor and patient, undue influence is generally presumed to have been exercised unless proven otherwise. See also coercion and duress.

On February 8, 2013, the CPSC implemented many changes and created new regulations to be followed. One major requirement now is that manufacturers and importers of children’s products must have a written policy against exercising undue influence on third-party testing laboratories.  The “undue influence” provisions of the new regulations also require employee training on each company’s “no undue influence policy.” This is just one example of the many new requirements in the third-party testing regulations for children’s products. And while the government spells out what to do, they leave you in the dark as to how to do it.

So now what? I participated in one of PPAI’s webinars (this one titled CPSIA: Undue Influence Training) to learn what I needed to do. It was quick (only 40 minutes), painless and full of great information. Here are a few tips:

Develop a written policy from your company officials stating that the exercise of undue influence is not acceptable. This not only satisfies the rule, but also emphasizes to staff the importance of this rule to the company.

Make the written policy statement visible and available to customers and the public.

Include the undue influence policy in your company’s code of conduct.

Communicate to staff that undue influence may result in undermining the integrity of testing data that can result in defective products that may injure or kill consumers, bring liability to the company and cause loss of business.

Set up a training program for anyone in your company who interacts with a third-party testing lab to help them learn how to avoid undue influence. The training should include:

  • Steps to avoid undue influence
  • The requirement to sign a statement saying they were trained
  • Use of examples to illustrate how staff can intentionally and inadvertently commit acts of undue influence on labs
  • Availablity of online training so all employees can participate regardless of physical location. A digital signature or other electronic verification (such as a check box) would meet the requirement saying they were trained.
  • Do not test “golden samples.” Ensure you follow appropriate sample selection protocols.
  • Don’t threaten to change third-party testing providers because of an unsatisfactory test report.
  • Avoid developing personal relationships with the lab that could somehow influence test results.

Retraining is needed if any policy changes are made. Establish annual training to ensure that any new employees will always be trained.

The CPSC must be immediately notified of any attempt by the manufacturer to hide or exert undue influence over test results.

Assure your staff that allegations of undue influence may be reported confidentially to the CPSC, and indicate how such a report can be made.

Exercising due care requires taking some affirmative steps to ensure the validity of the test report or certification being relied upon, according to the CPSC. For example, the exercise of due care may include:

  • Receiving and reviewing the required documentation, and making inquiries regarding any discrepancies
  • Asking questions about testing and sampling procedures
  • Requesting written test procedures
  • Ensuring the supplier’s third-party conformity assessment body is CPSC accepted
  • Spot checking a supplier’s test results
  • Visiting a supplier’s factory or third-party laboratory

For factory-supplied test reports train your factories in your policy and advise them that their acts of undue influence on labs may cause you to rely on their supplied test reports for Children’s Product Certificates (CPCs) that can be deemed invalid by CPSC and bring liability to you as the “certifier” for failing to exercise due care in preventing undue influence in your supply chain.  Due care applies to each domestic manufacturer or importer of a children’s product. If you are a distributor who is the “importer of record” on a shipment or if you purchase blank goods to send to a decorator for embellishment, you then become the “manufacturer.” The importer is not required to train employees of foreign manufacturers but must be sure to exercise due care.

And keep good records. The following records must be kept for five years and may be maintained in languages other than English if they can be immediately provided to the CPSC and translated into English within 24 hours of a request by the CPSC:

  • Children’s Product Certificate for each product
  • Records of each third-party certification test
  • Records of period tests
  • Records of descriptions of all material changes
  • Records of undue influence procedures including training materials and training records of all employees.

That’s it in a nutshell. You can download a sample of an undue influence statement of policy from PPAI’s website at www.ppai.org/inside-ppai/product-safety/product-guides. Also, it’s wise to invest the 40 minutes to watch the on-demand video. Find it at www.ppai.org and click on Education/PPAI On-Demand Webinars/Product Safety. The time you spend to understand undue influence is well worth it to be on the right side of the law.

Kim Bakalyar, CAS, is chief compliance officer for distributor PromoShop, Inc. (UPIC: pro). A 33-year veteran of the promotional products industry, she has worked in all aspects on the distributor side while focusing primarily on research, sourcing, vendor relations and, since 2010, on compliance and product safety.

>>More Tips On Demand

PPAI offers dozens of on-demand product safety webinars available free to PPAI members ($50 to nonmembers). Here’s a sample of titles developed in 2013. Each webinar runs about 30 to 45 minutes. Access all titles and watch the webinars by clicking on Education/PPAI On-Demand Webinars/Product Safety at www.ppai.org.

CPSIA: FDA Issues

CPSIA: Undue Influence Training

CPSIA: Reasonable Test Programs

CPSIA: Focus On Apparel Decoration

CPSIA: FDA Personal Care

Washington State, Part 1

CPSIA: Hazard Identification

CPSIA: Focus on Executive Desk Toys

CPSIA: Focus On State Regulations

CPSIA: Responsible Sourcing/Social Compliance

CPSIA: How To Handle A Recall

 

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