16 Ways To Avoid An Expensive Disaster

Yikes! We’re barely past the halfway point of 2016 and already a whopping $25 million in civil penalties has been assessed against businesses this year for product safety violations. A civil penalty is a fine levied by a regulatory agency of the federal government—in this case, the U.S. Consumer Product Safety Commission (CPSC), the agency charged with protecting consumers against unsafe products.

The magnitude of these penalties should not be a surprise to PPAI members. In his keynote address at PPAI’s 2015 Product Responsibility Summit, CPSC Chairman Elliot Kaye told our attendees that we should expect to see the commission assess significantly higher civil penalties in 2016 than in the past because, as Kaye sees it, it is the only way some companies will get the message that the agency is serious about protecting consumers. CPSC has shown the same enforcement resolve in the constant stream of recalls it announces each week, many relating to lithium ion batteries, a component found in dozens of promotional products. On July 6, the commission ordered 10 companies to recall a combined 500,000 lithium ion-powered hoverboards because of the risk of overheating, fire and explosion. If the companies involved had to refund the retail price of all those hoverboards, the total cost would be more than $100 million.

In this challenging regulatory environment, it is prudent for all suppliers and distributors to redouble their efforts to educate their employees on safety and compliance basics, and to verify that their company has a sensible compliance program in place for all of its supply chain activities, whether you work for a direct importer or are simply a sales rep selecting products from your favorite supplier. If you sell promotional products, the rules apply to you no matter what your role is in the stream of commerce.

Here is a glossary of definitions, tips, guidelines and best practices to use in your review and training. Treat it like a checklist to evaluate your own practices and to identify areas for improvement. Product safety is a process, not a destination. You and your team can use this list to trigger conversations and make sure that your processes are keeping up with your fast-growing company.

Definitions

1. Product Safety vs. Regulatory Compliance—both are equally important. Regulatory compliance refers to meeting (and, ideally, exceeding) standards required by regulators—the rules, laws and standards that apply to the products we manufacture, decorate and sell. Standards can either be mandatory, such as those referenced in state and federal law, or they can be voluntary standards developed by industry consensus at organizations like UL and ASTM International. Both types are important and both are used by regulators in their enforcement efforts. The Consumer Product Safety Improvement Act of 2008 (CPSIA) is an example of a federal law that contains many regulations. For example, it mandates that children’s products be tested annually at a recognized third-party laboratory and that children’s toys must comply with the ASTM F963 Toy Safety Standard. The law makes it illegal to sell children’s products and children’s toys that do not meet these requirements.

Product safety goes beyond regulatory compliance in dealing with whether a product is safe to use, even if it meets every applicable rule or it is one of the many products for which there are no mandatory or voluntary rules. The hoverboard recall is an example of a product for which no safety regulations were violated but the product was deemed by CPSC to be unsafe anyway. The commission has statutory authority to recall any product it deems unsafe, no matter what. Period.

2. Mandatory vs. Voluntary Standards—both are equally important. Whenever a standard or rule is incorporated into a law, that standard is mandatory. The Toy Safety Standard F963 is a good example. Originally a voluntary standard, it became mandatory after after the Mattel Barbie Doll recalls in the summer of 2007, when an angry Congress chastised industry for not policing itself. There are thousands more voluntary standards than mandatory standards as it benefits everyone—consumers, business and government—when business and industry polices itself. At PPAI’s 2015 Product Responsibility Summit, Marc Schoem, then CPSC’s long-term deputy director of compliance (now retired) stated unequivocally that the agency considers voluntary standards to be the minimum acceptable—the least a company should comply with. So be sure to always find out, usually by speaking to an expert at a testing lab, if there are voluntary standards applicable to the product you are selecting and then verify that the product complies.

Best Practice Tips

1. You are responsible! No matter who you buy from, no matter how long you have done business with that supplier or factory, no matter what, you are ultimately responsible for the quality, safety and compliance of every product you sell. Your customers don’t know your factory or supplier. They’re doing business with you because they trust you. Of course you will entrust a great deal of faith in your reliable, high-quality suppliers. But remember, even the largest and most trustworthy brands on the planet—Apple, Sony, Disney, Fisher Price and Johnson & Johnson to name a few—all have had major product recalls and serious quality gaffes, so you can be sure that even the most reliable companies in our industry have quality and compliance issues. Don’t take anything for granted and don’t assume anything. Suppliers have hundreds and, in some cases, even thousands of products on their websites. No one has the resources to be an expert in everything.

2. Nurture a product safety culture in every aspect of your work so that you automatically think of safety and compliance with each project you work on, with each product you select, with each order you take, with each supplier or factory you work with and with each client presentation you make. Always assume responsibility for the safety, compliance and appropriateness of the product you are selling. You are 100-percent responsible for making the right product decisions for your clients.

3. Learn the industry products that are subject to compliance requirements. Anything used by a child heads the list since the major focus of the Consumer Product Safety Improvement Act (CPSIA) is children’s products and children’s toys. Children’s apparel and sleepwear are both regulated by CPSC as are art materials such as highlighters. Food, and all products that come into contact with food, are regulated by the U.S. Food and Drug Administration (FDA). In addition to mints, chocolate and other common promotional foods, this category includes all types of promotional water bottles, tumblers, lip balms, hand sanitizers, sunscreens, lotions and cosmetics, sunglasses, first aid kids and more. Learn the key considerations for each of these products. For example, food containers, like drinkware, need to be tested to verify that chemicals from the container will not leach into the food or drink. This list is just an overview. You can get a more complete list, category by category, from any of the major testing labs.

4. Develop a standard checklist of questions to ask every client for every project you work on. For example: What kind of event is the product for? How will it be used? Who is the intended audience? If there are children, what are their ages? In which states or countries will the product be distributed? Does the client have any compliance requirements that exceed mandatory requirements? Then, use the information you learn to help you select the most appropriate products and to properly advise your supplier.

5. If you find out that the intended audience includes children, make sure the products you select are age appropriate, even if there are no specific compliance requirements. There is no mandatory regulation to prevent you from selecting a string backpack for a pre-school camp event, but a corded product for very young children is probably not the most prudent choice. Similarly, don’t select a product that would break into shards if a six-year old threw it on a cement floor, because sooner or later that’s probably going to happen. Common sense is the best rule here.

6. If children are involved, always require CPSIA compliance no matter the children’s ages. CPSIA is a complicated law that doesn’t always make common sense. For the most part, as noted earlier, CPSIA focuses on children’s products, which it defines as products primarily intended for children 12 years of age or younger. The CPSC has issued guidance as to what “primarily intended” means but you should ignore it. If children are involved, don’t try to figure out if the law technically applies—just make sure your product complies.

Let’s say you pick a product like a sports water bottle for a PTA fund raiser and the imprint is not something obviously juvenile like Elmo or Winnie the Pooh. Since the product has equal appeal to all ages, including young children, CPSC might say that the bottle is a general use item not subject to CPSIA requirements. Now assume that bottle is decorated with a lead-containing ink and a well-meaning consumer advocacy group finds out about it and issues a news release criticizing your client for distributing leaded products to children. Is your client going to want to stand up at a news conference and say, “Well, our vendor told us the bottle isn’t technically covered by the lead rules.” Of course not. At that point, it is a public relations nightmare for your client and the damage has been done, regardless of whether the product is technically compliant.

If you think this example is far-fetched, search Google for the Wegman’s grocery bag recall after a consumer group found lead in its reusable grocery bags, or a similar exposé by a Tampa TV station which led to millions of these bags being recalled. In both cases, no compliance violations were involved—only the common-sense fear about putting your family’s food in a container containing harmful lead—but the fiasco resulted in millions of bags being recalled.

7. Don’t assume that products you select for children have been tested to CPSIA requirements. If you learn that the intended audience includes children, you should always select products that are fully CPSIA-compliant. In the promotional products industry, that can be a challenge. Most items used for children’s events are imported as general use items that are appropriate for all ages and not subject to children’s product regulations. They only become “children’s products” subject to CPSIA after they are decorated with juvenile art. So it’s very possible that the supplier may not have incurred the expense to have the general-use product tested to children’s product standards. As a best practice, whenever selecting products for children or family audiences, always verify that the products have been tested to full CPSIA compliance at a CPSC-certified third party laboratory within the past 12 months. If the supplier claims that the product has been tested, ask for the test report and see for yourself.

Similarly, you should personally verify that the item is manufactured with the level of fit, finish and quality that a safe children’s product requires. Always devote your highest degree of scrutiny when children are involved.

8. Always ask where the products you sell are going to be distributed. Why is this important? Many states have laws that layer on top of federal law, and most countries have different product safety requirements than here in the U.S. Chemical regulations are a good example. In recent years, many states have passed chemical legislation regulating children’s products and children’s jewelry, and some have rules that apply to all consumer products. California, for example, has a chemical labeling law commonly known as Proposition 65 which is intended to warn consumers about products that contain carcinogens. Because of high testing costs, most companies opt to comply with Proposition 65 by affixing a warning label to each product stating that the product contains chemicals known to the State of California to cause cancer. But since it’s not generally desirable in the promotional industry for companies to hand out free gifts with a warning about cancer, some choose to avoid the warning labels by testing for the most common carcinogens. It’s not a fail-safe strategy and it’s not inexpensive. California’s carcinogen list exceeds 900 chemicals so there is no affordable testing protocol to test for all of them. When selecting products for California, work closely with your suppliers to learn their practices and to determine the best strategy—testing, labeling or a combination of both—that works for your risk tolerance and that of your clients. Illinois, Maine, Washington, Massachusetts, Vermont and Connecticut are among the other states that have passed chemical regulations in recent years.

Speaking of chemical legislation, you should be aware that Congress has just passed and President Obama has just signed into law the Lautenberg Chemical Safety Act, a major revision to the existing Toxic Substances Control Act of 1976. Over the next several years this updated law could impose significant new chemical restrictions for products in our industry.

The best strategy for complying with chemical regulation is to develop a relationship with one of the nationally recognized labs. PPAI members can take advantage of discounted testing rates with our affiliate partner UL as well as having access to a trove of educational materials and webinars through PPAI’s product safety initiatives.

9. Learn the questions to ask your supplier or test lab for every product you sell, until the answers are second nature to you. What voluntary and mandatory standards apply to the product? When and where was it tested? What was it tested for? CPSIA? Prop 65? Phthalates? Toy Safety? UL2056 (for lithium ion)? Is it UL certified or certified by another Nationally Recognized Testing Lab (NRTL)? Ask to see the full copies of test reports and give them to a person qualified to understand what they say. Are they current? Are they thorough? Were tests for all seven phthalates conducted? Which toy safety (ASTM F963) tests were conducted? Does the test report include color photos of the products tested? Do the photos match exactly with the product you plan to buy? Get an actual sample of the product and hold it in your hand. Does it seem well-made? Is the fit and finish that of a quality product? Can you easily pull it apart? Are there sharp edges? Is it a product you have experience with and knowledge of its material, design and construction? Are you aware of the technology used and the key quality differentiators with that product? Would you be able to differentiate between a high-quality, well-made, safe product and one with lesser quality? Sometimes the differences are hidden inside, especially with electronics where the protective circuits need the highest quality components that won’t fail under stress.

These are just some of the questions you should be asking yourself for every product you sell. Remember that when you select a product for your customer—particularly one that will be decorated with your client’s brand or logo—your client is trusting that you have the professional skills, knowledge and experience not to put their brand and logo in harm’s way by selecting an inappropriate, unsafe or non-compliant product. Of course you wouldn’t do that intentionally, but once you develop a true product safety culture you will begin thinking of that responsibility differently, as if you were deciding on a toy for your own newborn infant. That’s the level of caring and diligence your clients deserve. Buy from the most reliable factories and suppliers you can find but don’t put blind faith in anyone.

10. When you speak to your supplier about safety and compliance, speak to the person in charge of safety and compliance, not a customer service rep or a sales person. Compliance can be complex and nuanced based on the particular circumstances, even for those us of who deal with it every day. Over the past nine years, I have conducted dozens of workshops and training classes throughout the industry to educate and raise awareness on the basics of product safety and compliance in the promotional industry. But merely attending a class like mine or reading from a website description or an FAQ doesn’t qualify anyone to give advice. Always speak to an expert when seeking actionable information about product safety and compliance.

11. Regardless of the job title of the person you speak to, do not rely solely on what that person tells you or what you may read on their website. As noted, you are ultimately responsible.

12. Learn how to read a test report. Speaking about test reports, this is a good time to reiterate a topic that has caused more misunderstandings and “gotchas” than anything else in the promotional world: worthless test reports. Here’s what happens: You ask for a test report and your supplier or factory sends you what they have. It might be for the product you are considering, or it might be for a similar one or for a different product altogether. The test may be from a CPSC-certified lab or not. The report may be complete or not—with some tests covered and other ones not. Or, it could be for European standards instead of U.S. It may include a photo and may not. The point is, tests are expensive and most of the people handling these reports are not experts. So buyer beware. Learn how to read a test report and know what you’re looking for. Or find someone in your company who is an expert and verify that the tests are complete, in date and applicable to the specific product and color you’re purchasing. PPAI has presented webinars on this topic which are available online to members. There’s also a monograph to accompany the webinar that explains step-by-step how to read a test report.

13. Adopt a sensible risk management strategy. Quality and compliance is critical but it isn’t your only job. You have to find a way to manage this risk within the context of your time available. You already do this in your everyday family life without thinking about it as a formal strategy. You probably devote much more time selecting healthy foods for your children than you might spend deciding what outfit to wear in the morning. One has a much higher risk factor than the other. Similarly, when you don’t have extensive time to research a particular purchase, you probably pick the brand with which you’ve had the best experience. So you already know a lot about risk management. How does that translate to our industry? Devote the most time to the highest-risk products and the highest-risk situations. Children’s products, children’s jewelry and children’s toys all have significant compliance and safety implications, so you should naturally devote greater scrutiny to these products. Food products, food containers, hand sanitizers, lip balms, sunscreens, skin lotions and sunglasses are all regulated products with significant safety and compliance implications. And, of course, the single most dangerous product in our industry—lithium ion batteries—which power portable phone chargers, Bluetooth speakers and a wide range of other electronic products, deserve your greatest scrutiny. Learn the key safety and quality differentiators for each of these high risk products and then choose carefully. Very carefully.

14. Include safety and compliance requirements on your purchase orders. Compliance and product safety in the promotional industry require clear communication and a strong partnership between the distributor and supplier. All the information you learn in your client meeting—the intended audience for the promotion, the ages of any children involved, the states or countries where the product will be distributed—should all be written on your purchase order. Don’t assume anything. It doesn’t matter if you mentioned your requirements to a customer service agent or wrote them in the email with your purchase order (P.O.) attached. Suppliers get many hundreds of calls and thousands of emails every day. The only document that is certain to travel with your order from start to finish is your P.O., and it is also the contract between you and the supplier. If the product must comply with CPSIA, Prop 65 or the Illinois Cadmium-Safe Kids Act, include that as a special instruction on your purchase order. It’s also a smart idea to ask the supplier to specifically confirm that they can comply with these instructions.

15. If you hear of any safety or compliance incidents, report them to your company immediately. If your client emails you about an incident—perhaps that a glass tumbler broke and someone’s hand was cut—report it to your company and investigate immediately. Do the same for a compliance violation if you find out after the fact that a product your company shipped was not compliant. CPSIA contains strict reporting requirements that start the moment you learn of an incident. The single biggest reason for the civil penalties stated earlier was failure of these companies to notify CPSC in a timely manner. Always let your compliance team know of any incidents reported to you.

16. Find a compliance/product safety advisor or mentor to help you learn to make the right decisions. Even the most knowledgeable and experienced compliance practitioners have colleagues and consultants they rely on for expert advice and second opinions. No one is an expert at everything, especially in a field as broad and complicated as compliance. There are notable experts in our industry—at PPAI and its Product Responsibility Action Group—but the most reliable sources of compliance expertise are major testing labs, professional consultants and experienced product safety attorneys.

So there you have it—16 ways you can protect your clients and your business. Post these on your refrigerator. Pass them around your office. Make them part of your DNA. They will make you more valuable to your clients and to your employer, and they will help distinguish you in an industry of commodities. They are the essence of PPAI’s Product Safety Aware initiative and they will make you a worthy product safety ambassador. But most of all, they’re the right thing to do.

Rick Brenner, MAS+, is president of RFBrenner LLC, a management consulting firm. He coaches CEOs and advises industry firms on growth, strategy, finance, acquisitions, operations, product development, supply chain, improving profitability and developing wealth. Brenner also heads Product Safety Advisors LLC, which helps firms and implement product safety, compliance and social responsibility programs. He is the immediate past chair of PPAI, president elect of ICPHSO, the International Consumer Product Health and Safety Organization, and an 18-year industry veteran, 12 of which were spent as CEO at supplier Prime Line.

More Resources Available

The PPAI website is a well-stocked source of product safety information, tools, links and articles including compliance manuals, federal standards and regulations, webinars, FAQs, information on tracking labels, UL test protocols, a list of accredited testing labs and PPAI TurboTest, an online tool which guides users through required compliance testing by product. Find these resources and more at www.ppai.org/inside-ppai/corporate-responsibility.

PPAI-ProductRespSummit16

Where Will You Be September 18-20?

Reserve your seat at PPAI’s Product Responsibility Summit in National Harbor, Maryland, September 18-20, and educate yourself on all things relating to product safety, responsibility and compliance. Speakers include two CPSC commissioners as well as experts inside and outside the industry who will teach the latest developments and best practices. Get details and register at www.ppai.org/education/productresponsibilitysummit.