Industry Groups Decry CPSC Plan to Make Voluntary Recall Plans Legally Binding

“Unfortunately, the proposed changes seem to jeopardize the efficacy of the existing process, which could increase the risk of harm to consumers,” said Sens. Bob Casey, D-Pa., and Pat Toomey, R-Pa., in a letter to CPSC Chairman Robert Adler dated Jan. 30. “We worry that these changes may discourage companies from initiating precautionary recalls and increase compliance and administrative costs,” they said.

The proposal would create new burdens for both industry and government and add to the time required to get defective product off store shelves, said Casey and Toomey. “Companies that recall products will have to utilize lawyers to negotiate their ‘legally binding’ documents and would involve upper corporate management to approve forward-looking obligations, said the letter. “Similarly the CPSC will have to devote more time and personnel to negotiating recall documents and may be subject to litigation to determine whether a particular product is hazardous,” it said. “Given these issues, we are concerned that the proposed change could ultimately keep harmful products on store shelves for longer periods of time, and thus increase the risk of harm to consumers.”

CPSC’s proposed enforcement powers would discourage companies from coming forward with voluntary recall plans and working with the agency, said industry groups including the Consumer Specialty Products Association (CSPA) and the Consumer Electronics Association (CEA). The proposal to make voluntary recall agreements enforceable and subject to public review “will only slow down the process, as companies will not only have to negotiate the terms of their recall agreements with the CPSC, but will reduce a company’s incentive to work with the CPSC on recall actions to begin with,” said the CSPA.

Consumer product safety is instead better served by the current voluntary scheme, said the CEA in comments dated Feb. 4. “CEA believes that manufacturers will be more willing to address perceived product safety issues in a timely, open and transparent manner, under the existing voluntary recall [corrective action plan] rules, rather than the proposed CAP rules where the CPSC has explicit enforcement powers,” said the electronics industry association. “The enforcement threat will likely result in fewer voluntary corrective action plans. This result would defeat the longtime benefits of the voluntary CAP originally established by the CPSC and is therefore counterproductive.”

According to comments from the National Association of Manufacturers (NAM), the proposal would fix a non-existent problem. “There are no data to support the conclusion that a sea change in the voluntary recall process is necessary or would serve to benefit consumers’ safety,” it said. In its proposed rule, CPSC wants to make corrective action plans legally binding because it has had problems with some companies that have dragged their feet on the implementation of voluntary recall plans, but available data shows such problems are a rare occurrence, said NAM. “In fact, the Commission published data in April 2013 showing that between 2010 and 2012, 95 to 99 percent of voluntary Fast Track recalls were implemented within 20 business days,” it said. “There are no data to contradict the conclusion that the CPSC’s current voluntary recall process is effective.”

“Making voluntary corrective action plans legally binding is also unnecessary because the Commission has existing authority to address the very rare situation when a firm declines to comply with its voluntary recall plan,” said NAM. “At the time of the CPSC’s original voluntary recall rule—and now—the Commission has had the authority to seek a binding consent agreement if the Commission has reason to believe that an enforceable agreement is necessary.”

Consumer Safety Groups Say Proposal Would Improve Speed and Effectiveness

Not everyone opposed CPSC’s proposed stricter enforcement stance, however. Consumer advocacy groups Kids In Danger (KID), Consumer Federation of America (CFA), Consumers Union (CU), the Union of Concerned Scientists (UCS), National Research Center for Women & Families (NRCWF), and Public Citizen (PC) submitted joint comments to the agency arguing that the proposed rule would actually make recalls quicker and more effective.

“This new rule on voluntary recalls and corrective action plans is warranted and will provide a new measure of safety for consumers,” said the consumer groups. “In particular, the new rule will allow the CPSC to use its years of experience in developing corrective action plans to make them more effective, will eliminate delays that currently occur when details that should not be negotiable take days, weeks, or months to negotiate, and will allow the CPSC and recalling firms to more effectively use new tools such as social media to reach consumers. By making the agreements legally binding, CPSC can better ensure that the plan will be carried out in a timely manner and in the manner that was negotiated.”

Under the current voluntary scheme, consumer product recalls too often leave unsafe product in circulation, the consumer groups said. “In reality, the majority of recalled products remain unaccounted for with most of the products presumably still in use,” they said. “Unlike food recalls, where the product has often been consumed prior to the recall, consumer products remain in use for years after a recall, as the recent deaths in a decades-old hope chest that was recalled in 1996 illustrate. More information presented clearly to consumers at the time of the recall, additional ways to deliver recall information, and a legally binding corrective action plan will help to reduce the number of dangerous products that remain in consumer hands after recall.”