The CPSC is considering whether to issue an interpretative rule (to be included as part of 16 CFR 1115) that would significantly alter the way in which voluntary recalls and corrective action plans (CAPs) are conducted. One major aspect of the proposed rule is turning past agency practice into established guidelines for the content and form of voluntary recall notifications. The existing product safety regulations mandate that firms put the public on notice of their CAP in the event of a recall, but do not provide any formal instruction regarding the notice’s content or form. The second aspect of the proposed rule would provide that, when appropriate, a CAP may include the imposition of a compliance program. At the end of last month, CPSC staff recommended that the Commission adopt such a proposed rule.
The most significant and potentially controversial aspect of this draft proposed rule is the compliance program component. As we have previously noted in our discussions of the trajectory of CPSC enforcement trends, a number of firms have agreed to implement strict and costly compliance programs as part of civil penalty settlements at the behest of the CPSC. The compliance programs have involved, among other provisions, implementation of written standards and policies; a mechanism for confidential employee reporting of compliance related questions and concerns; management oversight of compliance personnel and a policy for record-keeping, among others.
The proposed rule seeks to grant the CPSC power to mandate that certain firms include compliance programs as part of their voluntary CAPs when warranted. Such circumstances would include firms who have recalled a number of products in a short period of time or who have failed to timely report a substantial product hazard or defect.
Voluntary Recall Notices
The proposed guidelines in the rule for the content of a voluntary recall notice largely mirror that of the mandatory recall notice, although this proposed rule notably expands the “form” of the notice to include, in part, social media outlets and requires that the notice be posted to the firm’s website. The proposed rule also lists press releases, recall alerts, in-store posters, and video/radio news releases as “the preferred means of disseminating recall information to broad audiences.”
Importantly, the Commission has not yet proposed or adopted this rule. Now is the time for concerned stakeholders to weigh in on the imposition of compliance programs and voluntary recall notice guidelines as the Commission seeks input from the public. The proposed rule certainly has the potential to affect the flexibility of the CPSC when it comes to negotiating individual voluntary recalls. These proposed rules are an essential read for any firm who might work with the CPSC on a voluntary recall.