Final In A Two-Part Series (read Part One)
In case you missed last month’s Part One about the recent sea change in the Consumer Product Safety Commission’s policy regarding the need for companies to create, implement and enforce a rigorous product safety compliance program, here’s the nugget: You need to do so now or face being forced to do so by the CPSC in a number of undesirable ways.
Congress did not expressly authorize the CPSC to require companies to develop product safety compliance programs. If authorized, the CPSC would have issued regulations mandating that companies develop and implement such a program. Because the CPSC does not have this express authority, it is working to bring about this requirement in a different way.
The CPSC has begun to put more punch into defining and enforcing its version of acceptable product safety compliance efforts. It has become increasingly aggressive in requiring companies to be more proactive in preventing, addressing and monitoring product safety problems, and acting with punitive measures against companies that don’t. The CPSC is sending a message that it is tired of repeated recalls after a product creates a safety hazard, and that it expects companies to take a more systematic and comprehensive approach to ensuring product safety.
The CPSC is, in effect, forcing consumer product companies to develop and implement consumer product safety compliance programs. Indicators include:
- Public speeches given by top CPSC compliance personnel promoting the importance of a product safety compliance program;
- The CPSC follow-up on product recalls or other reported product problems with an investigation into whether the company timely reported the matter to the CPSC; and, if not, an investigation as to whether the CPSIA’s greatly expanded civil penalties should be sought;
- The CPSC statement that the existence of a product safety program will be seen as a mitigating factor in determining if civil penalties should be sought for reporting violations and, if so, the amount;
- The settlement of the 2013 Kolcraft Enterprises civil penalty case, as well as six subsequent civil penalty settlements, that included the requirement that the companies develop compliance programs to effectively detect and address serious or continuous safety issues;
- CPSC commissioners’ statements about the Kolcraft Enterprises Settlement Agreement: “Going forward, we expect those companies that lack an effective compliance program and internal controls to voluntarily adopt them. If not, we will insist they do so;”
- CPSC-proposed voluntary product recall regulations that would permit the CPSC to require a product safety compliance program as a part of a Corrective Action Plan (CAP) if the company has: (1) had multiple previous recalls; (2) multiple violations of CPSC requirements over a relatively short period of time; (3) failure to timely report substantial product hazards on previous occasions; or (4) evidence of insufficient procedures and controls for preventing the sale of dangerously defective or violate products.
How Should Your Company Respond?
Develop a product safety compliance program now. You might find it helpful to review the relevant “Compliance Program” sections of the Kolcraft Enterprises settlement agreement to determine their applicability to your company. Many of the key actions you should consider are summarized below to help you get started in shaping your program.
- Your company’s product safety compliance program should be in written form rather than just a series of verbal policies. A written program can be more easily executed and you will have documented proof of your company’s efforts to provide to the CPSC upon its request.
- Establish, maintain, update as necessary and enforce a system of internal controls and procedures designed to ensure that:
- Information required to be disclosed to the CPSC is recorded, processed and reported to the CPSC promptly;
- All reporting made to the CPSC is timely, truthful, complete and accurate;
- Prompt disclosure is made to your company’s management of any significant deficiencies in the design or operation of internal controls that are likely to adversely affect your company’s ability to record, process and report to the CPSC; and that key decision makers get all relevant information on a timely basis.
- Information stuck in an “information silo” can not be acted upon when necessary. Having the information but not acting upon it is more problematic than not having the information in the first place. To avoid this, examine your company’s reporting and communication procedures and adapt them if needed.
- If your company imports or sells children’s products, your compliance program should cross reference your company’s product testing and certification program, which should be designed to ensure compliance with all applicable children’s product safety standards. The requirement for this program are specified in 16 CFR Part 1107.Your compliance program should recognize that:
- Children’s products must be tested by a CPSC-accredited third-party lab;
- This testing must be conducted on a “sufficient” number of “representative” samples;
- Additional testing must occur after a “material change,” which is a change in the product’s design or manufacturing process, including the sourcing of component parts, and on a periodic basis;
- A children’s product certificate is required for all products subject to a rule, ban, standard or regulation enforced by the CPSC;
- Component part testing and a children’s product certificate issued by a third party can only be relied upon through the exercise of “due care;”
- Provide your employees with written standards and policies, compliance training and the means to report compliance-related concerns to company executives;
- Product safety information about your company’s products should be analyzed, and any significant product safety incidents should be brought to the attention of senior management for appropriate response. Such data and related documents must be maintained for an appropriate period of time, normally five years.
- Recognize there could be multiple sources of information that might suggest a product safety concern about one of your company’s products. Among these sources of information are the following:
- Upstream suppliers
- Information about engineering, quality control or production data
- Information concerning a “material change” in the product’s design or manufacturing process, including the sourcing of component parts
- Quality assurance data/product improvement data
- Reports of production problems
- Product test results
- Customer service inquiries
- Consumer or consumer group complaints, claims, and/or lawsuits
- Insurance claims or payments
- Warranty data
- An unusual number of product returns from the distribution chain
- An unusual number of parts orders
- Retailer reports/feedback
- Returned product evaluations
- Traditional media
- Social media and online product reviews
- Incidents reported on the CPSC’s www.saferproduct.gov site or other information from the CPSC or other governmental agency
- Establish procedures to ensure that the above and other product safety information take the appropriate course of action:
- Gets to the attention of appropriate personnel
- Is reviewed and analyzed in a timely manner
- When appropriate, is brought to the attention of senior management and acted upon in a timely manner
- Document all of your actions in writing and be prepared to make the information available to the CPSC upon request;
- Recognize your company’s recordkeeping obligations, normally five years, which include, upon the CPSC’s request, providing access to all test reports, information related to the design, manufacture, improvements, processes, controls, testing and certification, and product samples.
The point of going through these steps is to create your company’s documentable, good-faith effort to enhance the safety of your products and provide an internal structure to continue to ensure their safety. Your company will most assuredly be better off addressing product safety compliance on its own terms and timetable than it would if forced by the CPSC to create a program after being charged with failing to meet product safety standards or other CPSC requirements.
David P. Callet is a shareholder with the law firm Greenberg Traurig and provides comprehensive client representation on all aspects of consumer product safety compliance. He was a featured speaker at the PPAI Product Safety Summit in 2012 and 2013. Reach him at 202-331-3144 or firstname.lastname@example.org.
TurboTest: From Start To Finish
PPAI Promotional Products TurboTest™ helps eliminate guesswork in navigating your way through the product safety minefield. PPAI members can find TurboTest™ at www.ppai.org/inside-ppai/compliance-in-a-box/turbotest. Have your member login handy.
1. Start here: Define the product → 2. Is it a children’s product? → 3. Does your product need a design review? → 4. Consider all consumer product safety rules → 5. See regs for General Conformity Certificates by product category → 6. Is the product flammable? → 7. Are blanks, inks and embellishments in compliance? → 8. For drinkwear, see FDA regs → 9. For jewelry, see additional regs. → Finished! Get a handy summary of requirements needed for your product.
>>Train your brain on product compliance by learning from top experts at the PPAI Product Safety Summit in Boston, Massachusetts, August 13-14, 2014. It’s a day and a half of immersive training on the most pressing product safety issues, as well as the business implications, challenges and opportunities associated with compliance. Register now at www.ppai.org/education.