A GUIDE FOR MANUFACTURERS, IMPORTERS, DISTRIBUTORS, AND RETAILERS ON PROCEDURES RELATING TO THE ENFORCEMENT OF STANDARDS AND REGULATIONS ISSUED UNDER THE CONSUMER PRODUCT SAFETY ACT (CPSA), THE FEDERAL HAZARDOUS SUBSTANCES ACT (FHSA), THE FLAMMABLE FABRICS ACT (FFA), THE POISON PREVENTION PACKAGING ACT (PPPA), AND THE REFRIGERATOR SAFETY ACT (RSA)
U.S. Consumer Product Safety Commission
Office of Compliance
Recalls and Compliance Division
Washington, DC 20207
Telephone: (301) 504-7913
This handbook contains information needed by manufacturers, distributors, importers, and retailers charged with violating a CPSC statute or regulation to ensure appropriate steps are taken to comply with CPSC requirements.
CHAPTER 1 – SANCTIONS UNDER CPSC STATUTES
CHAPTER 2 – PRESENTING EVIDENCE THAT A PRODUCT IS NOT VIOLATIVE
CHAPTER 3 – HOW A FIRM UNDERTAKES A PRODUCT RECALL
The U.S. Consumer Product Safety Commission (CPSC) is an independent Federal regulatory agency charged with reducing unreasonable risks of injury and death associated with consumer products. The CPSC has jurisdiction over about 15,000 types of consumer products used in the home, in schools, and in recreation. To carry out its mission, CPSC administers five statutes passed by Congress. They are: (1) the Consumer Product Safety Act, 15 U.S.C. §§ 2051- 2084 (CPSA), (2) the Federal Hazardous Substances Act, 15 U.S.C. §§ 1261-1278 (FHSA), (3) the Flammable Fabrics Act, 15 U.S.C. §§ 1191-1204 (FFA), (4) the Poison Prevention Packaging Act, 15 U.S.C. §§ 1471-1476 (PPPA), and (5) the Refrigerator Safety Act, 15 U.S.C. §§ 1211-1214 (RSA). This Handbook has been developed to assist firms in understanding what steps they should take when CPSC informs them or they become aware of a violation of CPSC statutes and regulations. Firms should review this Handbook in conjunction with the Letter of Advice (LOA) CPSC staff sends informing a firm of a violation and the applicable statutes and regulations provided with the LOA. After reviewing the information in the Chapters which follow, please direct any questions to the appropriate CPSC Compliance Officer or the Office of Compliance at 301-504-7913.
The goal of the Commission´s Compliance Program is to ensure that firms comply with the laws, regulations, and standards that protect consumers from hazardous products. To achieve this goal, the agency conducts three main types of compliance activities:
Specific compliance activities include the following:
Enforcing existing regulations and laws by (1) Conducting both domestic surveillance through inspections of the regulated industry and import surveillance at Ports of Entry in conjunction with the U.S. Bureau of Customs and Border Protection, and (2) following up on injury reports, consumer complaints, trade complaints or other allegations or indications that a firm is manufacturing or distributing a consumer product not in compliance with the law.
Section 15 of the CPSA requires manufacturers, distributors, and retailers to report to the CPSC, among other things, products that fail to comply with a standard or banning rule issued under the CPSA. If a product violates a mandatory standard under the FHSA, FFA, PPPA or RSA, the firm must determine whether the violation rises to the level of a defect that could create a substantial product hazard or creates an unreasonable risk of serious injury or death.. If so, the firm must report. Section 37 of the CPSA requires manufacturers to report to the Commission products which are the subject of at least three civil actions within a 24-month period that result in a judgment or final settlement in favor of the plaintiff. The Commission has the authority to remove hazardous products from the marketplace under section 15 of the CPSA and section 15 of the FHSA. Once the CPSC staff determines a product violates a specific statute or regulation, CPSC Compliance staff generally notifies the responsible firm (the product manufacturer, importer, distributor, or retailer). Notification to the responsible firm is usually in the form of an official letter, referred to in this handbook as a Letter of Advice (LOA).
* When the Commission issues a product standard, it finds that the standard is necessary to protect against an unreasonable risk of injury. Thus, for reporting purposes, firms must determine whether a violation of a standard under the FHSA, FFA, PPPA, or RSA creates a risk of serious injury or death.
The LOA informs the firm of the specific product and violation involved, requests the firm to take specific corrective actions, and informs the firm of the legal actions available to the Commission in the event the firm does not agree to correct the violations voluntarily.
In addition, the LOA informs the firm that if it disagrees with CPSC staff that a violation has occurred or believes the product is not subject to the Commission´s laws, it may question the staff´s findings and present evidence to support its position.
In enacting the various statutes administered by CPSC, Congress provided specific sanctions which may be imposed against firms that violate any provision of the statutes. These sanctions include both civil fines against the responsible firm and individual, up to a maximum of $1.825 million** (69 Fed. Reg. 68884, November 26, 2004) and criminal fines, and imprisonment of the responsible individual(s) for not more than one year. In addition, firms and individuals may be enjoined from continuing to violate CPSC statutes and regulations, and pursuant to court order, violative products may be seized to prevent distribution in commerce. Following is a discussion of the penalties and other sanctions that may be imposed by CPSC for violations of its statutes.
When a product is found to violate a CPSC statute, safety standard or banning regulation, the Compliance staff issues a LOA to the responsible firm and individuals. The LOA informs the firm what regulation or standard has been violated, what statute has been violated and states that a prohibited act has occurred. The prohibited acts are found in section 19 of the CPSA, 15 U.S.C. § 2068; section 4 of the FHSA, 15 U.S.C. § 1263; section 3 of the FFA,15 U.S.C. § 1192; and section 403 of the Federal Food, Drug, and Cosmetics Act (FD&CA), 21 U.S.C. § 343, for violations involving foods, drugs, and cosmetics subject to special packaging standards under the PPPA. Once a firm and/or individual is informed of the prohibited act(s), the firm and individual can determine the maximum sanctions to which they may be subject. Generally, the LOA will not contain specific details regarding penalties but will refer to this Handbook for assistance in determining the applicable penalties. Following is a summary of the penalties available under the CPSA, FHSA, FFA, and PPPA enforced through the FHSA and FD&CA.
Civil Penalties under CPSA – Under section 20 of the CPSA, any person who knowingly violates section 19 of the CPSA shall be subject to a civil penalty not to exceed $8,000 for each such violation**. With some exceptions, a violation of § 19(a)(1), (2), (4), (5), (6), (7), (8), (9), (10), or (11) shall constitute a separate offense with respect to each individual consumer product involved, except that the maximum civil penalty shall not exceed $1.825 million for any related series of violations (69 Fed. Reg. 68884, November 26, 2004). Criminal Penalties under CPSA – Under section 21 of the CPSA, any person who knowingly and willfully violates section 19 of the CPSA after having received notice of noncompliance from the Commission shall be fined (as described below) or imprisoned for not more than one year, or both. The Criminal Fine Improvements Act of 1987, Public Law 100-185, increased maximum criminal penalties under the CPSA to $100,000 for individuals and $200,000 for organizations unless a death occurred, in which case the maximum fine is $250,000 for individuals and $500,000 for organizations.
Civil Penalties under FHSA – The Consumer Product Safety Improvement Act of 1990, Public Law 101-608, amended section 5 of the FHSA by adding a new section 5(c)(1), 15 U.S.C. § 1264, which gives the Commission the authority to seek civil penalties against any person who knowingly violates section 4 of the FHSA. The term “knowingly” is defined in section 5(c)(5) of the FHSA. 15 U.S.C. § 1264(c)(5). The Commission may seek a civil penalty of up to $8,000** per violative product, up to a maximum of $1.825 million for any related series of violations (69 Fed. Reg. 68884, November 26, 2004).
Criminal Penalties under FHSA – Under section 5(a) of the FHSA, 15 U.S.C. § 1264(a), any person who violates section 4 of the FHSA shall be guilty of a misdemeanor and shall upon conviction thereof be subject to a fine (described below) or to imprisonment for not more than 90 days (one year for violations committed with intent to defraud or mislead or for second and subsequent offenses), or both. The Criminal Fine Improvements Act of 1987, Public Law 100-185, increased the maximum criminal penalties provided for in section 5(a) of the FHSA to $5,000 for individuals and $10,000 for organizations for first violations; $100,000 for individuals and $200,000 for organizations for second and subsequent offenses and for offenses committed with intent to defraud or mislead; and $250,000 for individuals and $500,000 for organizations for violations resulting in death.
Civil Penalties under FFA – The Consumer Product Safety Improvement Act of 1990, Public Law 101-608, amended section 5 of the FFA, by adding a new section 5(e), 15 U.S.C. § 1194 (e), which gives the Commission the authority to seek civil penalties against any person who knowingly violates a regulation or standard issued under section 4 of the FFA, 15 U.S.C. § 1193. The term “knowingly” is defined in section 5(e)(4) of the FFA, 15 U.S.C. §1194. The Commission may seek a civil penalty of up to $8,000** per violative product, up to a maximum penalty of $1.825 million for any related series of violations (69 Fed. Reg. 68884, November 26, 2004).
Criminal Penalties under FFA – Under section 7 of the FFA, 15 U.S.C. § 1196, any person who willfully violates section 3 or 8(b) of the FFA or fails to comply with section 15(c) of the FFA shall be guilty of a misdemeanor, and upon conviction thereof shall be fined (as described below) or imprisoned not more than one year or both. The Criminal Fine Improvements Act of 1987, Public Law 100-185, increased the maximum criminal penalties provided for in section 7 of the FFA to $100,000 for individuals and $200,000 for organizations unless a death occurred, in which case the maximum fine is $250,000 for individuals and $500,000 for organizations.
In enacting the PPPA, Congress chose to incorporate the penalties available under two existing statutes rather than provide separate penalties for prohibited acts involving products regulated under the PPPA. Depending on the type of product and the specific prohibited act involved, penalties provided for under the FHSA or the FD&CA may be applicable.
Civil Penalties – The failure to comply with a standard under the PPPA results in the product being classified as either a misbranded hazardous substance under the FHSA or a misbranded food, drug, or cosmetic under the FD&CA, as amended. If the product involved is classified as a misbranded hazardous substance, see Civil Penalties under FHSA, above. If the product involved is a misbranded food, drug, or cosmetic, refer to Criminal Penalties below, since no civil penalties are provided for under the FD&CA.
Criminal Penalties – If the product involved is a misbranded hazardous substance, see Criminal Penalties under FHSA, above. If the product involved is a misbranded food, drug, or cosmetic, criminal penalties for violations of the PPPA are spelled out in section 303(a)(1) of the FD&CA, 21 U.S.C. § 333. Under that section, any person who violates a provision of section 301 shall be guilty of a misdemeanor, and upon conviction thereof shall be fined (as described below) or imprisoned for not more than one year (or for subsequent offenses and offenses committed with the intent to defraud or mislead, three years). The Criminal Fines Improvements Act of 1987, Public Law 100-185, increased maximum criminal penalties under the FD&CA for first violations to $100,000 for individuals and $200,000 for organizations and for second and subsequent offenses and for offenses committed with intent to defraud or mislead to $250,000 for individuals and $500,000 for organizations.
Following are the applicable provisions which authorize the Commission to seek to enjoin firms from violations of the CPSC statutes and regulations.
Section 22(a) of the CPSA, 15 U.S.C. § 2071, states: “The United States district courts shall have jurisdiction to take the following action:
Section 8(a) of the FHSA, 15 U.S.C §1267, states:
“The United States district courts and the United States courts of the territories shall have jurisdiction, for cause shown and subject to the provisions of rule 65 (a) and (b) of the Federal Rules of Civil Procedure, to restrain violations of this Act.”
Section 6(a) of the FFA, 15 U.S.C. §1195, states:
“Whenever the Commission has reason to believe that any person is violating or is about to violate section 3, or a rule or regulation prescribed under section 5(c), of this Act, and that it would be in the public interest to enjoin such violation until complaint under the Federal Trade Commission Act is issued and dismissed by the Commission or until an order to cease and desist made thereon by the Commission has become final within the meaning of the Federal Trade Commission Act or is set aside by the court on review, the Commission may bring suit in the district court of the United States, for the district in which such person resides or transacts business … to enjoin such violation and upon proper showing a temporary injunction or restraining order shall be granted without bond.”
For violations of the PPPA which result in a product being classified as a misbranded hazardous substance, see Injunctions Under The FHSA, above. For PPPA violations which result in the product being classified a misbranded food, drug, or cosmetic, the injunctive provisions of the FD&CA apply.
Section 302(a) of the FD&CA, 21 U.S.C. § 332, states:
“The district courts of the United States and the United States courts of the Territories shall have jurisdiction, for cause shown, to restrain violations of section 331 of this title, except paragraphs (h), (i), and (j).”
Products which are in violation of an applicable standard or regulation are subject to seizure and condemnation proceedings under the various statutes.
Section 22(b) of the CPSA, 15 U.SC.§ 2071(b), states “Any consumer product
when introduced into or while in commerce or while held for sale after shipment in commerce shall be liable to be proceeded against on libel of information and condemned in any district court of the United States within the jurisdiction of which such consumer product is found….”
Section 6(a) of the FHSA, 15 U.S.C. §1265(a), states “Any misbranded hazardous substance or banned hazardous substance when introduced into or while in interstate commerce or while held for sale (whether or not the first sale) after shipment in interstate commerce, or which may not, under the provisions of section 4(f), be introduced into interstate commerce, or which has been manufactured in violation of section 4(g), shall be liable to be proceeded against while in interstate commerce or at any time thereafter, on libel of information and condemned in any district court in the United States within the jurisdiction of which the hazardous substance is found: Provided, That this section shall not apply to a hazardous substance intended for export to any foreign country if it (1) is in a package branded in accordance with the specifications of the foreign purchaser, (2) is labeled in accordance with the laws of the foreign country, and (3) is labeled on the outside of the shipping package to show that it is intended for export, and (4) is so exported.”
Section 6(b) of the FFA, 15 U.S.C. §1195(b), states “Whenever the Commission has reason to believe that any product has been manufactured or introduced into commerce or any fabric or related material has been introduced into commerce in violation of section 3 of this Act, it may institute proceedings by process of libel for the seizure and confiscation of such product, fabric, or related material in any district court of the United States within the jurisdiction of which such product, fabric, or related material is found….”
Section 304(a) of the FD&CA, 21 U.S.C. § 334, states “Any article of food, drug, or cosmetic that is adulterated or misbranded when introduced into or while in interstate commerce or while held for sale (whether or not the first sale) after shipment in interstate commerce, or which may not, under the provisions of section 404 or 505 of this title, be introduced into interstate commerce, shall be liable to be proceeded against while in interstate commerce, or at any time thereafter, on libel of information and condemned in any district court of the United States or United States court of a Territory within the jurisdiction of which the article is found….”
This Chapter contains the procedures to be followed if a firm disagrees with the Commission staff determination that a product is in violation of a regulation or standard administered by CPSC.
RESPONDING TO CPSC NOTIFICATION OF VIOLATIVE PRODUCT STATUS
When the CPSC Compliance Officer notifies you in a LOA that a product you manufacture, import, or distribute fails to comply with a CPSC statute, standard or regulation, you may disagree with the staff´s determination.
The LOA will state that the firm may present evidence that a violation does not exist or that a product is not covered by the applicable statute or regulation. In response to the LOA, you may submit to the Compliance Officer evidence and arguments that support why you believe the product is not violative, not covered by a specific regulation, or should not be refused admission into the U.S. (if the violation involves an import sample).
A firm may respond to a Letter of Advice in writing and/or the firm may request an informal hearing to meet personally with the Office of Compliance staff to orally present views and evidence.
Such evidence may consist of:
Any additional evidence or arguments that a firm presents are reviewed by the appropriate CPSC Compliance staff, including appropriate technical staff. If the information you present does not, in the staff´s opinion, refute the staff’s claim that the product is violative or covered by a specific regulation, the Commission staff generally will notify you in writing why it believes the information submitted is insufficient before pursuing any enforcement action against the products or your firm.
If a firm continues to disagree with the staff and declines to take corrective action, the staff may request the Commission to approve appropriate legal proceedings including issuance of an administrative complaint, injunctive action, seizure action, or such other action as may be appropriate.
This Chapter provides information on initiating a product recall when the CPSC staff determines that the hazard associated with a product warrants such action.
Once the CPSC staff determines that a product is in violation of a Commission statute or regulation, it will notify you in the LOA that corrective action to address the violation is warranted. The LOA generally will also include specific corrective actions the CPSC staff believes are appropriate to address the violation. Where appropriate, based on the nature of the hazard and the likelihood of injury associated with the noncomplying product, the Compliance staff will request that the firm recall the product from the marketplace, including consumers who already own the product. This corrective action plan, after being reviewed by the CPSC staff for adequacy, forms the basis for any action you take to resolve the problem. It is unlikely that any two recall programs will ever be identical. Therefore, companies should be prepared to address issues that invariably arise. For instance:
This list addresses administrative and operational functions of a firm involved in a product recall. Even if a product recall is merely potential, a firm should be prepared to respond to the questions listed above.
A firm that undertakes a recall should develop a comprehensive plan that reaches throughout the entire distribution chain and to consumers who have the product. The firm must design each communication to motivate people to respond to the recall and take the action requested by the firm.
Once the CPSC Compliance staff and a firm agree on a remedy to correct a violative product, the CPSC Compliance staff works with the firm to put together an effective plan for public notification and implementation of the recall. The Commission will publicize the terms of the plan to inform the public of the nature of the noncomplying product hazard and the actions being undertaken to correct that hazard.
The objectives of a recall are:
The CPSC´s Office of Information and Public Affairs sends the news releases to national wire services, major metropolitan daily newspapers, television and radio networks, and periodicals on the agency´s news contact mailing list. News releases from the Commission receive wide media attention and generate a good response rate from consumers. Each recall news release should use the word “recall” in the heading and should begin, “In cooperation with the U.S. Consumer Product Safety Commission (CPSC)….”
Recall news releases must include the following:
When a recalling firm has the ability to reach all owners of a recalled product through direct notification (for example, by registration cards, membership or loyalty cards, catalog sales, credit card purchases, extended warranty sales, etc.), the staff will prepare a recall alert in the form and style of a press release. It will be posted on the CPSC website (available via: www.cpsc.gov or www.recalls.gov) so consumers can confirm and verify the Commission is involved in the recall. Summaries of recall alerts are also provided to national wire services.
A video news release (VNR) is a video version of the written news release that describes the recall in audiovisual terms. Distributed via satellite to television stations nationwide, it is an effective method to enhance a recall announcement. A VNR increases the chances that television news media will air information about a recall because it effectively provides news of the recall to television news producers in the form that they need.
Commission staff works with firms to produce VNRs announcing recalls. Like news releases, VNRs need to communicate basic information clearly and concisely. VNRs should incorporate the same information as the news release, as well as video images of the product. They often also include brief statements of firm officials and/or the Chairman of the Commission. When writing a VNR script, remember that, if this information is to reach consumers, television networks or local stations must pick it up — which means that the script must be written for television producers. A brief guide describing how to produce a VNR is available from the Office of Compliance upon request or at: http://www.cpsc.gov/BUSINFO/vnrprod.html.
Posters are an effective means of providing continuing notice of recalls to consumers at points of purchase or other locations that they visit. Guidelines for posters and counter cards are as follows:
When a firm produces a point of purchase poster announcing a recall, it must contact its retailers or other entities that the firm wants to display the posters before the recall is announced. The firm must explain the reason for the recall and the contribution to public safety that the posters provide. The firm must also:
CPSC recommends that posters be 11 x 17 inches, but in no case smaller than 8.5 x 11 inches. These two sizes are easiest to mail in bulk quantities. Larger sizes may be appropriate for repair and service shops. Also, many retailers, particularly large chains, have specific requirements for posters, including size and some product identification information. To avoid delays and having to reprint, a firm producing a recall poster must contact retailers in advance to see if they have any such requirements.
Like news releases and posters, letters, advertisements, bulletins, newsletters, and other communications about a recall need to provide sufficient information and motivation for the reader or listener to identify the product and to take the action you are requesting. They should be written in language targeted to the intended audience.
A firm conducting a recall must provide a toll-free (800/888/877/866) telephone number for consumers to respond to the recall announcement. Generally, this number should be dedicated only to the recall. Historically, the Commission staff has found that most firm’s systems for handling consumer relations or for ordering products, repairs, or accessories are unable to respond effectively to callers about recall announcements, particularly during the first few weeks after the initial announcement. When establishing a telephone system to handle a recall, be over-generous in estimating consumer response, especially during the first several days/weeks. It is easier to cut back than it is to add more capacity once a recall is announced, and consumers who are unable to get through may get upset. Whether you use an automated system or live operators to answer the calls, prepare scripts and instructions for responding to questions. Operators or taped messages should begin by identifying the firm and product and explaining the reason for the recall. Most consumers who hear about a recall by radio, television, or word of mouth will not remember all the information they initially heard. Again, at its beginning, the message should reinforce the need for listeners to act, particularly if the message is lengthy. CPSC Compliance staff must review all scripts before the recall is announced. All automated systems should provide a number for consumers to contact the firm for special problems, e.g., problems completing repairs or installing parts.
Companies should post and make available a notice of the recall in a conspicuous location on their own website. The recall information should be segregated from other company information with a 11 distinct icon or heading designating this safety information. Firms should provide historical recall information since not all products are returned during the designated recall period. Companies should provide an opportunity for owners of recalled products to register for the recall remedy on-line.
Companies whose products come under the jurisdiction of the CPSC should develop an organizational policy and plan of action before a product recall or similar action becomes necessary. This policy and any related plans should focus on the early detection of product safety problems and prompt response.
Designating a firm official or employee to serve as a “recall coordinator” is a significant step that a firm can take to meet its product safety and defect reporting responsibilities. Ideally, this coordinator has full authority to take the steps necessary (including reporting to the Commission) to initiate and implement all recalls, with the approval and support of the firm´s chief executive officer.
We suggest the recall coordinator have the following qualifications and duties:
At the outset, the recall coordinator should fully review the firm’s product line to verify regulatory conformance of each product. The firm should institute a product identification system if one is not now in use. Model designations and dateof- manufacture codes should be used on all products, whether they carry the firm’s name or are privately labeled for other firms. If a product recall is necessary, this practice allows the firm to identify easily all affected products without undertaking a costly recall of the entire production. Similarly, once a specific product has been recalled and corrected, a new model number or other means of identification used on new corrected products allows distributors, retailers, and consumers to distinguish products subject to recall from the new items. Until a production change can be made to incorporate a new model number or date code, some companies have used sticker labels to differentiate products that have been checked and corrected from recalled products.
The goal of any product recall is to retrieve, repair, or replace those products already in consumers’ hands as well as those in the distribution chain. Maintaining accurate records about the design, production, distribution, and marketing of each product for the duration of its expected life is essential for a firm to conduct an effective, economical product recall. Generally, the following records are key both to identifying noncomplying products and conducting recalls:
Consumers no longer view product recalls in a negative light. Many thousands of products have been recalled over the years. Today, consumers believe they enjoy a safer, better product as a result of a recall. How well a firm conducts a timely, reasonable recall of a product it produced can have a strong influence on the consumer’s attitude about the firm. Successful product recalls in the past have often rewarded companies with continuing consumer support and demand for the firm’s products.