Consumer Product Safety Act
The Consumer Product Safety Act states that any company that receives numerous complaints about a products defects must report these claims to the CPSA. According to the CPSA reporting responsibilities belong to manufacturers, importers, distributors and retailers of consumer products. Each is required to notify the Commission if it obtains information which reasonably supports the conclusion that a product fails to comply with a consumer product safety standard or banning regulation. Also if the product contains a defect which could create a substantial product hazard, creates an unreasonable risk of serious injury, or death to the consumer.
The Commission’s interpretative regulation explains the company’s obligations and those of the Commission.. This requires manufacturers of a consumer product to report to the Commission if a particular model of a consumer product is the subject of three civil actions that have been filed in Federal or State court, each suit alleges the involvement of that model in death or serious injury to the body. Then at least three of the actions will result in a final settlement involving the manufacturer; or in a judgment for the plaintiff within any one of the two year periods specified. The first two year period began to run on January 1, 1991 and ends on December 31, 1992. The second two year period starts on January 1, 1993; the third, on January 1, 1995; and so forth. Manufacturers must file a report within 30 days after the settlement or judgment in the third civil action to which the reporting requirement applies.
Why is the reporting required? The intent of Congress was to encourage widespread reporting of potential product hazards. Congress sought not only to have the Commission uncover substantial product hazards, but also to identify risks of injury which the Commission could attempt to prevent through its own efforts, such as information and education programs, safety labeling, and adoption of product safety standards. Although CPSC relies on sources other than company reports to identify substantial product hazards, reporting by companies is invaluable because firms often learn of product safety problems long before the Commission does. For this reason, any company involved in the manufacture, importation, distribution or sale of consumer products should develop a system of reviewing and maintaining consumer complaints, inquiries, product liability suits and comments on the products they handle.
If a firm reports to the Commission it does not necessarily mean there is a substantial product hazard. The CPSC simply requires firms to report whenever a product fails to comply with a consumer product safety rule, fails to comply with a voluntary standard upon which the Commission has relied, contains a defect that could create a substantial product hazard, or creates an unreasonable risk of serious injury or death. Thus, a product does not need to actually create a substantial product hazard to fit the reporting requirement.
It is the Commission’s view that a firm should take the first step of notifying the Commission when the information available to the company reasonably indicates that a report is required. It is in the company’s interest to assign the responsibility of reporting to someone in executive authority. The individual’s knowledge of the product and the reporting requirements are valid reasons for assigning the responsibility.
A company is considered to have knowledge of product safety information when such information is received by an employee or official of the firm who may reasonably be expected to be capable of appreciating the significance of that information. Under ordinary circumstances, five days is the maximum reasonable time for that information to reach the chief executive officer or other official assigned responsibility for complying with the reporting requirements. Weekends and holidays are not counted. The Commission will evaluate whether or when a firm should have reported.
This evaluation will be based, in part, on what a reasonable person, acting under the circumstances, knows about the hazard brought on by the product. “A firm shall be deemed to know what it would have known if it had exercised due care ascertaining the accuracy of complaints or other representation.” If the company is uncertain whether the information is reportable, the firm may elect to spend a reasonable time investigating the matter, but no evaluation should exceed ten days unless the firm can demonstrate that a longer timetable for the investigation is reasonable. If a firm elects to conduct an investigation to decide whether it has reportable information, the Commission must approve it. At the end of ten days, “the firm has received and considered all information which would have been available to it had a reasonable, expeditious, and diligent investigation been undertaken.” (Public)
Failure to report with the above requirement is a prohibited act of the CPSA which states: It shall be unlawful for any person to fail to furnish information required. Any person who commits a prohibited act is subject to civil penalties of the CPSA, including fines up to $1.25 million for a related series of violations, and criminal penalties, which includes fines up to $500,000 or imprisonment no more than one year, or both.
Public Law. “Consumer Product Safety Act.” Oct. 27, 1972. http://www.herc.org/library/cpsa.pdf#search=’consumer%20product%20safety%20act%201976′.
Illinois Department of Public Health. “Toy Recalls.” Children’s Product Safety. May 16, 2001: http://www.idph.state.il.us/childsafety/toys.htm
“The US Consumer Product Safety Act and its implementation by the Consumer Product Safety Commission.” http://www.iue.it/LAW/WP-Texts/Joerges91/chap24.htm
“The Story Of The Laws Behind The Labels.” April 06, 1999: http://vm.cfsan.fda.gov/lrd/histor1b.html.