Retailers operating in Canada will soon face significant new obligations under the new Canada Consumer Product Safety Act. The federal government has just announced that this wide-ranging legislation, enacted in December 2010, will come into force as of June 20, 2011. In order to ensure compliance, retailers need to start developing and implementing appropriate procedures as soon as possible.

The CCPSA brings Canada's consumer product safety regime more into line with that in the United States. While a number of key regulations are still to be published, the legislation:

  • prohibits the manufacturing, importing, advertising or sale of consumer products that pose an unreasonable danger to human health and safety;
  • prohibits anyone from packaging or labelling a consumer product in a manner that could reasonably be expected to create an erroneous impression that it is not a danger to human health or safety;
  • sets out specific requirements relating to document retention and the reporting of incidents and test results;
  • empowers Health Canada to order remedial measures, including recalls, and to conduct inspections; and
  • establishes increased fines and penalties, including administrative monetary penalties.

Under the legislation, consumer products are broadly defined to include any product that could reasonably be expected to be obtained by an individual for non-commercial purposes, including components, parts, accessories and packaging. The phrase "danger to human health and safety" is also broadly defined to include any unreasonable existing or potential hazard posed by a consumer product during or as a result of normal or foreseeable use and that may reasonably be expected to cause death or injury or have an adverse effect on health, whether immediate or chronic.

The penalties for non-compliance with the CCPSA can in some cases be severe, including fines in the millions of dollars and jail time.

Retailers will find themselves on the front line in dealing with this legislation. Here are some of the details of what they need to be ready to deal with:

"Incident" reporting

The CCPSA requires sellers to report to Health Canada any incidents involving consumer products. "Incident" is defined to include any occurrence anywhere (not just in Canada), a defect or characteristic, or an incorrect, insufficient or missing label or instructions, any of which resulted (or may reasonably have been expected to result in) death, serious injury or a serious adverse effect on someone's health. In addition, a recall or any other measure instituted for human health or safety reasons by a foreign entity or a provincial government is considered to be an incident.

Once a seller, importer or manufacturer learns of an incident, it has two days to provide a report to Health Canada that contains all the information about the incident within their control. This report must also be provided to the party from which a seller or importer obtained the product. Importers and manufacturers must also provide Health Canada with a report within 10 days of the incident containing information about the incident and the product involved, and identifying other products that they import or manufacture that could be involved in a similar incident, as well as any measures they propose to take with respect to those products. Health Canada has published a draft incident reporting form.

The proposed Regulation makes it clear that knowledge of an incident must reach a "responsible person" within the organization before the clock starts running on the obligation to report to Health Canada. A responsible person is considered to be a directing mind. Who is considered a directing mind - and it may be more than one person in an organization - will depend on the size and nature of the organization, its decision-making structure and the nature of the information available. Knowledge of an incident could come from a number of sources, including not only consumers but also government agencies, a supplier or a lab reporting test results. In any event, it will be crucially important to ensure that front-line retail staff take in information from consumers regarding any incidents and pass that information along to supervisors who can inform the organization's responsible person.

Document retention and disclosure

Retailers must now maintain records of names and addresses of persons from whom they obtained a consumer product, as well as the location where they sold the product and when. These records will have to be kept until the end of the sixth year after the end of the year to which they relate, at their place of business in Canada (unless the Minister exempts them from doing so on the basis that it would be unnecessary or impractical to keep the documents in Canada). These documents must be provided to the Minister upon request.

Inspections and Orders for remedial measures, including recalls

To verify compliance with the CCPSA, Health Canada inspectors will have the power to enter, at any reasonable time, any place (or vehicle) in which they have reasonable grounds to believe that a consumer product is manufactured, imported, packaged, stored, advertised, sold, labelled, tested or transported. Among other things, an inspector will be able to examine or test anything, take samples, seize articles, search computers, copy documents and stop the activity in question. Persons in charge of the premises are required to provide inspectors with reasonable assistance and with any information that they reasonably require.

If the Minister of Health believes on reasonable grounds that a consumer product is a danger to human health or safety, the Minister can order a manufacturer, importer or seller to recall it. This is a major change in the consumer product safety regime in Canada as until now, it was only possible for Health Canada to request recalls be undertaken voluntarily.

The Minister also has the authority to stop the manufacturing, importing, packaging, storing, advertising, selling, labelling, testing or transporting of the product, or to take any measure that the Minister considers necessary to remedy non-compliance with the Act or Regulations.

If a party fails to comply with a Minister's Order, then the Minister can carry out the recall or other remedial measure at the party's expense.

Consumer products not covered by the CCPSA

Many types of consumer products are not subject to the CCPSA because they are dealt with under other federal Acts. These include cosmetics, food, pest control products, fertilizers, motor vehicles, firearms, ammunition, plants and seeds.