Bacteria in your airconditioner? Exploding Electronics?
There is little that strikes fear into the heart of a manufacturer than hearing that their consumer product may have a safety issue. Sometimes even in the best run business things can go wrong which results in your product potentially causing harm to a consumer. In Australia, the Competition and Consumer Act requires that consumer goods are recalled in the event that a reasonably foreseeable use of the goods may injure someone.
As you can see, the threshold question of whether the goods ‘may cause injury’ applies a very broad test. Accordingly, in the event that only a very small likelihood of a safety issue exists with a product, a recall must be commenced. Manufacturers are required to consider the way that a consumer may use (and indeed possibly misuse!) goods and determine whether someone could get hurt as a result. Goods must also be recalled in the event that it is likely they do not meet safety standards or the goods have been banned.
The type of good will impact on the choice of regulator likely to administer the recall. Listed or therapeutic goods are subject to the regulatory power of the Therapeutic Goods Administration due to their specialised nature, whereas general merchandise is regulated by the ACCC.
In the event that a manufacturer determines that a safety issue exists, they should devise an effective recall plan. The ACCC requires the following information to be included in any communication to consumers:
- A product description and a picture;
- A description of the defect and the hazard created;
- A ‘what to do’ section to tell the consumer how to take action; and
- Contact details and how a consumer can receive a refund, repair or replacement.
For general merchandise, manufacturers must notify the ACCC within 2 days after initiating a product recall. This is achieved by completing an online form on the Product Recalls website.
It is important to note that the ACCC and manufacturers may differ significantly in respect of the possible recall strategy and the breadth of advertising that may be required. For those direct sellers who are fortunate enough to know each consumer who has purchased the product, a letter or email notification directly to the consumer may suffice. In the event that the consumer is unknown, advertising broadly in newspapers in the format required by the ACCC may be required. Whatever the strategy, all product recalls are listed and able to be publicly searched on the Product Recalls website, so attempting to keep the recall ‘under the radar’ is unlikely.
Failure to recall an unsafe product may result in the Minister taking action and issuing a compulsory recall against a product. Significant additional brand damage and further financial exposure in relation to product liability claims are also the inevitable result of failing to take decisive and swift action to remove hazardous products from the market. Fines, civil pecuniary penalties and enforcement action by the ACCC may also be imposed for products that infringe the Australian Consumer law.