If you’ve ever conducted a recall in cooperation with the U.S. Consumer Product Safety Commission (“CPSC”), you know that the recall itself isn’t the end of the process. The CPSC requires companies to submit monthly reports providing information about the recall – When and where did you publish/post notice of the recall? How many people called in response to the recall notice? How many e-mailed? How many replacement products / refunds / fixes were given out? Pretty straightforward and standard stuff. And up until now, the form in use had been the same one used for years. But in May of this year the CPSC quietly rolled out a new version of the form. Frankly, the old form was due for an update anyway, but the CPSC used this as an opportunity to sneak in some requests for additional information that the previous form didn’t in two specific areas: (1) social media; and (2) monitoring of online sales. And while they may seem like simple requests, it’s the implication that they’re creating additional requirements for companies that has the manufacturing community concerned.
It’s 2014 and everyone is using social media. Grumpy Cat has a Facebook page. God is on Twitter. And if you make or sell a product, chances are you have a social media presence with one or both of those media. Tide laundry detergent? Liked. Home Depot? Tweeting. Heck, even Triscuits have their own Facebook page. In this day and age, you’d be remiss if you didn’t use social media as it’s a great way to promote your brand and interact directly with consumers. The CPSC knows that (and Tweets), and though it’s been slow adapt to modern technology, it’s now attempting to capture data on the use and effectiveness of social media for recall notices.
New to the October 2014 version of the form are questions about how many times the recall was announced via the company’s Facebook and Twitter accounts, and how much re-distribution or likes those posts received:
It seems like standard information, and the kind that any company with even a semblance of a social media policy should be able to capture and report. But as the report itself sets out, this information is only requested “As applicable under your [corrective action plan].” This reaches back to the negotiation of your corrective action plan (“CAP” or recall plan), so if you agreed to provide notification via Facebook, Twitter or otherwise, you need to be prepared to track and capture that data. If you did not include notification via Facebook, Twitter or otherwise in your CAP, then this section is inapplicable to you – though upon reading it, you may not realize that.
Keep in mind that the CPSC has no statutory authority to require companies to announce recalls via social media. They will request that you agree to as part of your CAP, and whether or not you should agree to that is something to be evaluated on a case-by-case basis. But don’t be fooled by the tone of this report – if you didn’t agree to do it, then you don’t have to report it.
Online Resale Monitoring
Resale of recalled goods is no small issue. Every recall press release includes language indicating that federal law prohibits any person from selling products subject to a recall, and the CPSC takes the resale of recalled goods very seriously. In September of 2014, retailer Meijer paid a $2,000,000 civil penalty for selling recalled products including fans, tricycles and heaters, just to name a few. Meijer learned the hard – and expensive – way that you can’t simply sign away your recall responsibilities to a third-party provider; the responsibility is still yours to make sure that the recalled products are being handled properly. I don’t think you’ll find anyone out there arguing that it isn’t a good thing for companies to do their best to keep recalled products from ending up back on store shelves.
And at first glance, the new ask in the CPSC’s monthly report seems to address that same issue:
Again, on its face, it seems reasonable. You are encouraged to monitor and IF you monitored, what did you find? But put this in its proper context – reporting paperwork sent by a federal government agency with enforcement powers – and the word “encouraged” sounds a lot more like “required.” And this would be a big requirement, especially in light of responsive comments by Marc Schoem, the CPSC’s Deputy Director of the Office of Compliance and Field Operations, in his October 1, 2014 letter to NAM, in which he said, “[the CPSC] expect[s] recalling firms to identify their recalled product being sold and offer the remedy to the seller.” Note the careful choice of language – the CPSC “expects” but cannot legally require or mandate this – as it signals a drastic change in policy, and an attempt to shift the CPSC’s responsibilities on to the companies.
Looking for and stopping the resale of recalled products is part of the CPSC’s enforcement activities and they have dedicated staff whose job it is to monitor sites like Amazon, Craigslist and the like for recalled products. It’s a full-time job, and then some. The internet has given rise to a plethora of avenues by which to sell goods, and even a federal government agency with a budget of $118 million can’t keep tabs on it all – not for lack of effort or ability, but simply due to the overwhelming size of the online marketplace.
I spent some of my time at the CPSC working on cases where people were selling recalled goods online, but the approach was much different than the one signaled by Schoem’s letter. When the CPSC found someone selling a recalled product online, the seller was contacted and told that the product was recalled and couldn’t be sold. Most times the sellers said they didn’t know and immediately took the ad down and that was the end of it. If not, other actions were taken to either take the add down, track down the seller or both. But in no instance did the CPSC contact a seller and indicate that they should obtain a remedy so as to sell a legal product instead of a recalled one. But that appears to be exactly what the CPSC is expecting companies to do after a recall. And on top of that, you’re supposed to seek them out to offer them the remedy? Those sellers are breaking the law by selling a recalled product; now the CPSC is saying it’s your job to find them and help them out.
Every company recalling a product needs to have a plan for the proper handling of recalled products, but wasting finite resources to track down random resellers in the dark corners of the internet shouldn’t be part of that plan. Again, this goes back to negotiating your CAP – if you agreed to do it, then make sure you do it well. But remember, you don’t have to agree to it, it’s all in the CAP negotiation.
On the technology side of this, I have to give the CPSC a little credit for adopting some new technology and dragging itself into the 1990s at least. It only took until 2014 for the CPSC to ask about Facebook and Twitter use, even though both platforms have been public since 2006. The CPSC is on Facebook, but solely as a static informational page with no actual posts. It’s a poignant instance of hypocrisy where they expect you to use Facebook while they refuse to, but maybe it’s for the best. With only 1,187 likes on its page, the CPSC is exponentially less popular than toilet paper (19,000 likes) or watching paint dry (241,000).
But at least they’ve spiffed up the reporting form, finally offering it in a fillable .pdf format. Earlier versions couldn’t be filled out electronically and often came back to the CPSC covered in illegible handwriting and inscrutable notations. But with this new form, you can simply go to the CPSC’s website, fill it out electronically and then click subm………. nope. You still have to submit it via e-mail or fax. Yes, fax. In 2014.
Assuming the information provided on the form is going to be translated into quantifiable and usable data, wouldn’t it make more sense to have companies fill it out and submit it online, where the data can be directly imported into a database? It makes you wonder if the CPSC is even using this information, or how accurately it’s compiled, if they’re relying on one person to manually enter data provided on handwritten, faxed forms.
The Lesson: Negotiate, Negotiate, Negotiate
Like many of the CPSC’s other initiatives and actions, there are no actual legal requirements in these changes. Just because there are blanks in this monthly report form asking about social media and resale checks doesn’t mean that you are legally required to do these things. If they’re included in your CAP, then you need to do them, and you need to do them well and report on them accurately. If they’re not in your CAP, don’t be fooled or intimidated by the fact that the CPSC is using words like “expects” and asking for information you’re not required to track or provide.
This highlights just how important it is to have a carefully negotiated and drafted CAP. And that’s really the key word here – negotiated. The CPSC has dropped the language from its press releases, but not so long ago they all used to start with “The U.S. Consumer Product Safety Commission, in cooperation with the manufacturer named below, today announced a voluntary recall of the following consumer product.” If you look at recent recall announcements, they’ve dropped all reference to the fact that the recalls are voluntary – not because they aren’t voluntary (they are all voluntary, even Bucky Balls and Nap Nanny were agreed-to recalls) – but because the CPSC wants to give the impression that they’re not voluntary and that companies have to do what they want. That’s simply not the case. You, as a manufacturer, distributor or retailer, have rights and protections, but like a cop who pulls you over, the CPSC isn’t going to openly tell you those rights while they’re investigating you. That’s where having the right representation makes all the difference when dealing with the CPSC; knowing the difference between what you’re legally required to do and what the CPSC simply wants you to do can make a world of difference.
The Law Offices of Regan A. Sweeney, PLLC
Cushman Street, Portland, Maine
(207)370-0720 / www.regansweeneylaw.com