The U.S. Consumer Product Safety Commission (CPSC) published a final rule on December 9, 2010, on the implementation of a Publicly Available Consumer Product Safety Information Database (the “Database”), and the Database has been in “soft launch” since January 24, 2011. Earlier Alston & Bird client advisories1 explored the challenges the Database presents for manufacturers of consumer products. In this advisory, we review the particular impact the Database may have on the retail community.

Executive Summary

Unlike manufacturers, retailers are largely left out of plans for operation of the new Database, despite having a significant stake in its contents and facing the risk of being inaccurately reported in it. While CPSC’s final rule allows almost anyone to submit a report about “any injury, illness, or death; or any risk of injury, illness, or death” related to a consumer product and encourages submitters to name a product’s retailer, the rule allows only two parties—manufacturers and private labelers—to register to receive notice of and to comment on those reports.

By definition, a manufacturer includes an importer, so any retailer that manufactures or imports the products it sells may also receive notice of and comment on reports of harm in its capacity as a manufacturer or importer. Similarly, a retailer that is the owner of a brand or trademark on the label of a consumer product that bears a private label may receive notice of or comment on reports of harm. Other retailers that sell non-private label products purchased from U.S. manufacturers or distributors, however, are not permitted to register to receive Database-related information electronically from CPSC.

Many retailers, therefore:

  • will not be notified when CPSC receives and is preparing to publish a report of harm that names the retailer,
  • may not comment on reports of harm and
  • may not submit claims that reports of harm contain the retailer’s confidential business information.

Consequently, such retailers should consider alternative means to monitor Database reports and ensure the accuracy of retailer information that is available to consumers in the Database.

Content of Reports of Harm

Retailer names are likely to be prominent in reports of harm contained in the Database. CPSC will not publish a report of harm in the Database unless the manufacturer or private labeler is identified. Additionally, CPSC encourages, but does not require, that the submitter name the retailer of the product in the report of harm. When describing a product that is the subject of a report, a submitter must only include “a word or phrase sufficient to distinguish a product identified in a report of harm as a consumer product.” More specific information, such as the product’s price, model, serial number, date of manufacture or retailer, is optional. Because most consumers and other submitters are more likely to know where a product was purchased than to know the product’s serial number or date of manufacture, the name of a product’s retailer is likely to be one of the most significant identifying features for products reported in the Database. The potential risks to named retailers are therefore significant because retailers will likely be prominently featured in the reports without notice and with limited opportunities to respond to their contents, as discussed further below.

Who May Submit and Comment on Reports of Harm

CPSC’s final rule establishes a broad pool of eligible persons who may submit reports of harm but very narrowly defines who may respond to them with comments. The imbalanced result is depicted in the following table and is described in more detail below:

Click here to view table

1. Impact of Broad Definition of Submitters

In addition to the five categories of submitters listed above, which are specifically enumerated in the Consumer Product Safety Improvement Act (CPSIA),2 CPSC initially proposed to add a sixth category of “others” who might submit reports. In its final rule, however, CPSC determined that the first five categories were so broad that they already encompassed “other” submitters. Indeed, CPSC’s final rule lists as examples of consumers not only those who use a product, and the family, friends and agents of that user, but also “observers of the consumer products being used.” Thus, CPSC noted that “anyone can be classified as a consumer even if they are also acting as a doctor, lawyer, investigator, consumer advocate, or trade complainant.” CPSC added that many other potential submitters could be described as public safety entities.

Retailers, manufacturers, importers, and even some within the CPSC have expressed concern about the implications of this broad eligibility standard for submitters. Commissioner Nancy Nord, for example, predicted that the broad standard could lead to publication of reports about a product from manufacturers or retailers of a competing product, from labor unions or from others that “may have their own reasons to ‘salt’ the database.”3 In commentary with is final rule, CPSC said: “The fact that the submitter may have a professional interest in the report does not negate the truth of the report.” This almost limitless range of potential submitters makes it important for any product manufacturer to be aware of Database reports in which they are named. Retailers, however, face an even greater burden in this respect, because CPSC will not notify retailers or invite retailers to comment on reports.

2. Inability to Receive Notification of Reports or Comment on Them

According to CPSC’s final rule, only manufacturers and private labelers may register to receive electronic notification of reports of harm. Also according to the rule, CPSC will notify a manufacturer or private labeler named in a report. Named manufacturers and private labelers may then “comment” on reports of harm, before or after the reports are published. In its comment, a manufacturer or private labeler may include a claim that the report contains the company’s confidential business information.

During the rulemaking process, CPSC considered whether instructions in the CPSIA to include in a Database report “any additional information it determines to be in the public interest” would permit CPSC to allow other industry members specifically identified in a report of harm to comment on the report. CPSC determined, however, that the statute is “unambiguous” in that only manufacturers and private labelers may comment on reports. Consequently, the final rule does not require CPSC to notify retailers when they are named in reports of harm and CPSC has no present intention to do so. Even when a retailer learns it has been named in a report of harm, the retailer, unless responding as a manufacturer or private labeler, is excluded from the comment process and is also excluded from requesting that CPSC redact confidential information about the retailer contained in the report.

CPSC’s commentary in its final rule highlighted at least two reasons that commenting on reports of harm may be important to manufacturers, but it failed to recognize the similar importance to retailers as well:

  • First, CPSC ruled that persons may submit reports without firsthand knowledge of a harm or risk of harm. To address concerns with this position, CPSC noted that “a manufacturer is free to post a comment indicating whether they know if the submitter had firsthand knowledge or not.” In contrast, a retailer does not have the opportunity to comment about whether a submitter has firsthand knowledge of a harm or risk of harm, even if the retailer is alleged to have sold the offending product and may know if the submitter had firsthand knowledge.
  • Second, CPSC’s final rule permits submission and publication of reports of harm long after an alleged incident occurs. CPSC reasoned: “If a manufacturer or private labeler believes that the date of the incident is relevant to users of the Database, it may highlight this fact in its comment.” Retailers, on the other hand, may not comment on the relevance of the time that has elapsed since the date of an alleged incident.

 A third reason that commenting on reports would be important to retailers, but was overlooked by CPSC, is that a report might contain a retailer’s confidential business information. CPSC’s rule, however, does not provide retailers with any opportunity to make confidentiality claims.

Limited Retailer Opportunities for Participation

Despite CPSC’s restriction of the registration, notification and comment process to manufacturers and private labelers, retailers have three limited opportunities to affect information about them that CPSC publishes in the Database, although each is inferior to a rule that would offer to all retailers the same level of participation offered to manufacturers and private labelers.

1. Coordinate with Manufacturers

Although CPSC will not allow retailers to register to receive reports of harm and will not mail information to retailers named in reports, CPSC implied that retailers still have limited opportunities to receive information. CPSC stated in commentary in its rule that “firms are free to make their own agreements regarding when they must inform certain business partners of reports of harm.” CPSC added that it “will permit businesses to designate multiple email recipients, but allow only one account holder to submit a response.”

Thus, retailers with sufficient leverage in their supplier relationships should consider working with manufacturers and importers to increase their access to information in the Database. Retailers may encourage these companies to register with CPSC. Retailers may also request to be included as an email recipient for reports of harm. Where a manufacturer might anticipate receiving information about multiple retailers, a retailer could request that a manufacturer forward to the retailer any reports naming that retailer. This potential manufacturer cooperation with retailers would be especially significant, because it would be the only means for retailers to obtain information about reports of harm before those reports are published in the Database. The question remains, however whether any but the largest retailers and specialty retailers would have sufficient leverage with manufacturers—and manufactures would have sufficient incentives themselves—to negotiate such Database report notification agreements. Retailers that are able to make such partnering arrangements would then be in a position to work with their manufacturers to ensure that appropriate comments are submitted addressing their concerns.

2. Regularly Search the Database

Reports of harm in CPSC’s database will be publicly available and searchable. Since CPSC will not send notice of pending reports of harm to retailers prior to their publication, and since retailers may not always be able to obtain such reports from manufacturers, retailers should develop plans for continued monitoring of published reports. Although retailers would be able to take some preemptive measures if they knew of reports of harm prior to their publication, CPSC will accept and publish manufacturer comments about a report of harm at any time, including after publication of the initial report.4 Again, this places significant burdens on retailers to form as many notification and comment agreements as possible with manufacturers so that they may request that manufacturers submit comments on their behalf, even prior to the release of a report during the 10-day period between manufacturer notification and publication.

3. Request Exclusion of Materially Inaccurate Information

CPSC’s final rule permits “any person or entity reviewing a report of harm or manufacturer comment, either before or after publication in the Database” to request that all or a portion of the report or comment “be excluded from the Database or corrected by the Commission because it contains materially inaccurate information.” CPSC confirmed in conjunction with the publication of its final rule that “[n]othing in the statutory text allows us to limit who may submit a claim of material inaccuracy.” CPSC therefore said it “will consider any claim of material inaccuracy as long as it meets the minimum requirements for submission of a claim and is appropriately supported.” However, unless retailers work with manufacturers to receive notice of a report before its publication, retailers will only have the opportunity to identify materially inaccurate information after the information is made available to the public. That being said, after a report or even a comment is published, a retailer may request that CPSC correct any materially inaccurate information about a retailer or products it sells. Retailers should therefore use this mechanism, at a minimum, to correct inaccuracies in submitted reports.

Conclusion

CPSC’s final rule makes it a virtual certainty that retailers of consumer products will be named in a substantial number of Database reports that anyone, including a retailer’s competitor, may submit. At the same time, the final rule restricts the ability of retailers to receive information about, and to comment on, reports. Furthermore, these reports may contain inaccurate information about retailers without any opportunity for retailers to be aware of, or correct, such inaccuracies before the reports are made publicly available. The reports may also contain confidential business information that retailers may not request to have removed from public access.

To address some of these concerns, there are limited ways retailers may participate in the operation of the Database. Retailers that are also manufacturers or importers may register with CPSC, receive information and comment in their capacity as manufacturers or importers. Retailers that purchase consumer products from U.S. distributors, however, should (i) consider making arrangements with product manufacturers to be notified and pass through comments, (ii) continually monitor the content of the publicly available reports in the Database, and (iii) submit requests to CPSC as necessary to correct materially inaccurate information. Additionally, retailers should continue to work with their representatives in Congress to address the above concerns through corrective legislation or the use of congressional pressure to push CPSC to reform Database operations so that they are more transparent and equitable to the retail community.