Under the Consumer Product Safety Act (CPSA) and the Consumer Product Safety Improvement Act of 2008 (CPSIA), regulated companies must file a Section 15(b) Report upon obtaining information that reasonably supports the conclusion that a product fails to comply with an applicable consumer product safety rule, contains a defect that could create a substantial product hazard, or creates an unreasonable risk of injury or death.
A Section 15(b) Report must be submitted to the Consumer Product Safety Commission (CPSC) "immediately," which has been interpreted by CPSC to mean within 24 hours. The CPSIA increased the maximum penalty for a knowing violation of the act to $100,000 with a maximum penalty of $15 million for a series of related violations.
CPSC has already begun serious enforcement of Section 15 reporting obligations. In April 2009, CPSC announced that it had entered into settlement with 14 companies for knowingly failing to report a violation of a product safety rule. The action was settled for $1,055,000.
A week later, CPSC announced that it had settled another claim for $1.1 million against a company that failed to properly report a product safety violation. In light of a prospective CPSC budget increase of 71 percent for 2010, enforcement can be expected to increase.
Manufacturers, importers, distributors and retailers must ensure that they are fulfilling their Section 15 reporting obligations.