• CPSC Aggressively Imposing Civil Penalties for Failure to Timely Report Product Hazards

The Consumer Product Safety Commission (CPSC) recently announced that it had successfully imposed yet another large civil penalty, this time a $960,000 fine, on a Fortune 500 tool manufacturer over allegations that the firm failed to report defects in a grass-trimming tool. This fine closely follows other recent penalties imposed for alleged failure to timely report product hazards. Since the beginning of July 2011 alone, a nationwide department store has agreed to pay $750,000 over allegations that it failed to report sales of children’s garments with drawstrings; a national pharmacy chain has agreed to a $45,000 fine over similar allegations; and a premium kitchen appliance manufacturer has agreed to pay $450,000 over claims that it failed to report alleged defects in refrigerator doors. Together, that totals more than $2 million in penalties in less than six weeks. (It should be noted that these firms have disclaimed liability.)

This recent trend suggests that the CPSC may be stepping up the use of its civil penalty authority, which Congress greatly strengthened in 2008’s Consumer Product Safety Improvement Act (CPSIA). Under current law, the CPSC may issue fines of up to $100,000 per violation, up to a maximum penalty of $15 million for a related series of violations. As recent events show, the CPSC is willing to use this enhanced authority and secure sizable fines.

Manufacturers, importers and others subject to the CPSC’s authority should bear in mind the agency’s civil penalty powers — and its apparent willingness to use them — when approaching matters implicated by the Consumer Product Safety Act. In most instances, companies have only 10 working days to investigate potential substantial product hazards before reporting to the CPSC. As these recent civil penalties make clear, companies must act quickly when they become aware of potential hazards with consumer products in order to avoid civil penalties for failure to timely report to the CPSC.

  • Congress Amends CPSIA Lead Requirements

Last week, Congress approved legislation to amend key parts of the Consumer Product Safety Improvement Act (CPSIA). Unlike previous attempts to amend the CPSIA, this amendment had bi-partisan support. According to GOP.gov, the legislation:

  • provides relief from an August 14, 2011, deadline by making the 100ppm lead limit prospective;
  • creates a more flexible exemption process for products containing lead in excess of statutory limits;
  • grants relief to bikes and ATVs from lead limits and testing;
  • grants relief for printed books and other materials;
  • permits the resale by thrift and charity stores of used children’s products made prior to the 2008 law;
  • creates additional but limited flexibility in the statutory testing regime;
  • grants limited relief for small batch manufacturers;
  • limits the retroactivity of future crib standards;
  • creates an exception for inaccessible parts made of phthalates similar to the exception for inaccessible parts containing lead; and
  • makes modest modifications to the database created by the 2008 law.

The key amendment allows the CPSC to apply lower lead limits for children’s products prospectively. Under the original version of the CPSIA, products that did not meet lead limits established by the CPSC could no longer be sold after the date the new standard took effect and would need to be destroyed. By making new lead standards apply prospectively, the amendment allows retailers and secondhand sellers to continue to sell existing inventories that do not meet the new standards.