Responding to public outrage, the House and Senate overwhelmingly (424:1 and 89:3, respectively) passed the most significant consumer safety legislation in more than 30 years. The important changes for U.S. manufacturers, distributors, importers and retailers are the following.
- Increased Civil Penalties – The New Act increases the maximum civil penalty for violations to $15 million. If the past predicts the future, the Consumer Product Safety Commission will be aggressive in fining companies for failing to report safety defects. Reports must be signed by the CEO of a company unless there is a prior written delegation in place.
- Enhanced Recall Authority – The New Act continues to authorize the CPSC to mandate recalls of “defective” products. Reports and recalls must be commenced “immediately” (which can mean as little as 16 days from the time a company knew or should have known of a safety related defect). A failure to report (or to report immediately) can not only result in fines, it also can lead to increased CPSC control of a company’s recall plans, can complicate the defense of product liability suits, and can generate damaging publicity.
- Lead in Children’s Products – Effective 180 days after enactment, the New Act would ban children’s products with lead levels exceeding 600 parts per million; even more stringent regulation is promised within three years. Children’s products are those intended for children 12 and younger.
- Phthalates – The New Act bans specified types of phthalates – plastic softeners found in hundreds of products.
- Public Database – A database on the safety of consumer products based on reports from consumers, government agencies, healthcare professionals, child service providers and public safety entities will be made available to the public – including plaintiffs’ attorneys and the media.
- Whistle Blower Protections – Public and private sector whistle blowers can obtain injunctions, compensatory damages, reinstatement, back-pay with interest, compensation for special damages, litigation costs, expert witness fees and attorney’s fees.
- Toy Safety Standards – ASTM International Standard F963-07 will have the force of law and violations can lead to fines, recalls and other civil remedies and possible criminal prosecutions.
Because of the extraordinary time pressures to identify and evaluate defects, develop a recall plan and report to the Commission, it is strongly recommended that affected companies have contingency recall plans in place.