In January of this year, the Canadian federal government introduced in the House of Commons the Canada Consumer Product Safety Act (“CCPSA”), known as Bill C-6.
Following a number of high-profile recalls and concerns about tainted toothpaste, lead toys from China and other health and safety risks relating to consumer products imported into and sold in Canada, the CCPSA was first proposed in April of 2008, but fell off the order table when the federal election was called.
This proposed legislation protects consumers by addressing or preventing dangers to human health or safety that are posed by consumer products in Canada (whether manufactured domestically or imported into Canada). Canadian manufacturers, importers of consumer products into Canada, retailers in Canada and/or advertisers that communicate to consumers in Canada must understand the limitations that are being legislated and their new obligations. The potential for severe penalties is intended to ensure that persons dealing with Canadian consumers take the health and safety of Canadian consumers seriously. The negative effects of a public accusation of harming consumers can destroy the reputation of a manufacturer, importer and/or retailer. This proposed legislation increases the risk adopted by manufacturers, importers, retailers, sellers and advertisers that fail to:
- adopt a compliance mentality;
- conduct proper due diligence;
- implement risk-management policies and procedures; and
- maintain proper books, records and reporting procedures.
The proposed legislation applies to most manufacturers, importers, advertisers and sellers of consumer goods. The proposed legislation is very broad and applies to all consumer products with the exception of a specific list that includes explosives, cosmetics, plants, seeds and firearms, which are covered by other statutory regimes. The proposed legislation applies to tobacco products, but only in respect of the ignition propensity of the products.
The proposed legislation prohibits all persons (other than manufacturers and/or importers) from advertising or selling a consumer product that they know, or ought to know, is:
- a danger to human health or safety;
- the subject of a mandatory recall order under the Act or a voluntary recall in Canada; or
- the subject of a measure that the manufacturer or importer has not carried out under a mandatory order under the CCPSA.
In addition to other prohibitions under Canadian law regarding misleading advertising and consumer protection, the proposed legislation prohibits all persons from packaging or labeling a consumer product in a manner that is false, misleading or deceptive, or that is likely to create an erroneous impression regarding whether it is a danger to human health or safety. The proposed legislation also prohibits all persons from packaging or labeling a consumer product in a manner that is false, misleading or deceptive relating to its certification or compliance with a safety standard or regulations. Further, no person shall advertise or sell a consumer product that it knows or ought to know is advertised, packaged or labeled contrary to such prohibitions.
In addition, no person shall knowingly provide the Minister of Health with false or misleading information in relation to a matter covered by the proposed legislation.
The penalties imposed under the proposed legislation are severe. For example, the punishment for the commission of an offence is determined at the Court’s discretion. If the prosecutors proceed by way of indictment, the fine may be up to $5 million. In addition, individuals may be imprisoned for up to two years.
The proposed legislation (and the regulations that will follow) establishes an administrative penalty system for contraventions similar to the existing administrative monetary penalty system for customs, import and export controls, antidumping/countervailing duty and other border measures. The Canadian Cabinet may enact regulations fixing penalties and/or ranges of penalties for each form of infraction under the Act and/or regulations. The maximum administrative penalty will be $5,000 for not-for-profit organizations and other non-commercial activities, and $25,000 for all other organizations and activities.
Given the fact that administrative penalties may add up to significant monetary amounts, it is very important for all manufacturers and importers to engage in compliance practices and implement internal processes and procedures to ensure compliance with the Act and to hold the protection of consumers as paramount in importance.
It is not wise to wait for problems to arise. The assistance of legal counsel should be sought to advise as to the law that will apply, provide updates when the regulations are published, conduct a compliance audit of the operations, prepare a compliance report, develop internal compliance programs, policies and procedures, develop document retention and reporting procedures, structure internal reporting to an internal or external compliance officer, develop lines of communication for concerned employees/whistle-blowers, and develop training manuals and teach directors, officers, employees, agents, mandataries and others about their obligations.