On August 14, 2008, President Bush signed the Consumer Product Safety Improvement Act of 2008 (CPSIA) into law. The Consumer Product Safety Commission (CPSC) held a public meeting on September 4, 2008, to discuss the effects of the CPSIA and to lay out a timeline for implementation of the various regulations and actions required by the law, which represents the largest overhaul of consumer product safety laws since Congress created the CPSC in 1972. Though a number of recent recalls related to lead paint in imported children’s toys and other products led Congress to pass the CPSIA, which received broad bipartisan support, the new law reaches multiple areas related to consumer safety and will change the landscape of consumer protection law and regulations in numerous ways. This advisory summarizes four key changes in the CPSIA applicable across a broad range of products: (i) increased civil penalties for violations of product safety laws; (ii) the ability of state attorneys general to enforce certain provisions of the CPSA; (iii) expanded recall authority under the CPSA; and (iv) whistleblower protection for anyone who reports a hazardous product to authorities.
Increased Civil Penalties
The CPSIA increases the potential civil penalties for violations of the CPSA, Federal Hazardous Substances Act (FHSA) and the Flammable Fabrics Act (FFA) from $8,000 to $1,250,000 per violation. The revisions also increase the maximum civil penalty for a series of violations from below $1,825,000 to $15,000,000.1 H.R. 4040, Sec. 217. Based on the CPSC’s recent practice of seeking increasingly higher civil penalties under the prior regulations, these increases are likely to have an immediate and substantial impact on liabilities for violations of these acts.
Enforcement by State Attorneys General
Against the expressed wishes of the CPSC, the new law authorizes state attorneys general to seek injunctive relief to enforce certain provisions of the CPSA. Specifically, an attorney general may now sue to enjoin a company from 1) importing, manufacturing, distributing or selling a product that is not in compliance with a consumer product safety standard; 2) importing, manufacturing, distributing or selling a product that is banned; and 3) failing to properly notify consumers of substantial product hazards or failing to adequately repair and/or replace a product in accordance with an order of the CPSC. H.R. 4040, Sec. 218. An attorney general must provide at least 30 days’ notice to the CPSC of its intent to sue prior to filing an action, and the CPSC may intervene in any lawsuit brought under this authority. In addition, an attorney general may not bring suit regarding any issue already being litigated by the United States.
Enhanced Recall Authority
The CPSIA also increases the range of products subject to the CPSA’s recall regulations by expanding the definition of “substantial product hazard” in the CPSA. The new definition includes any products subject to CPSC jurisdiction under any rule or act, including, for example, products regulated under the Federal Hazardous Substances Act. H.R. 4040, Sec. 214. Previously, the recall regulations applied only to products meeting the definition of “consumer product” within the CPSA, which did not include many products regulated under the FHSA or the Poison Prevention Packaging Act. In addition, all products that fail to comply with any law or regulation enforced by the Commission, not just those consumer products previously regulated by the CPSA, are considered to have substantial product hazards. The CPSIA now allows the CPSC to require a party to cease distribution of a product containing a substantial product hazard, notify others in the chain of commerce to cease distribution and notify state and local health officials of potential product hazards.
The CPSIA also reduces the choices that a manufacturer, distributor or retailer of a product containing a substantial product hazard has to alleviate potential problems. Prior to the CPSIA, the CPSC could only require a company to choose between recalling a product, repairing a product or refunding the purchase price. The CPSIA now places that decision within the CPSC’s authority. H.R. 4040, Sec. 214. This shift in authority may prevent companies from making the most cost-effective decisions when remedying substantial product hazards. The CPSIA also requires the CPSC to establish new regulations for the form of notices to be distributed when a product is recalled. H.R. 4040, Sec. 214. In addition, the CPSC may now require companies to publish notices in languages other than English.
The CPSIA establishes whistleblower protection for any person who provides information to state or federal authorities regarding a violation of any law or regulation enforced by the CPSC. H.R. 4040, Sec. 219. If an employee believes he or she has been terminated wrongfully, or otherwise mistreated, by a corporation for providing information to authorities, the employee may file a complaint with the secretary of labor. If the secretary of labor or a court determines that mistreatment has occurred, an employee may be entitled to reinstatement, back pay and expenses, including attorney’s fees.
In all, the CPSIA provides the CPSC and states with significantly increased authority to enforce consumer product safety laws and regulations. It includes an eight-fold increase in civil penalties and allows the CPSC to require specific corrective actions for a wider range of products. Finally, it provides the state attorneys general with a previously unavailable mechanism to enforce federal consumer product safety laws and regulations.