Lessons from LG: If you’re conducting a product recall, make sure it works!

For those Australians who were blissfully unaware of the potential risk that their home solar system may overheat and spontaneously catch fire, hopefully these advertisements have prompted the urgent action they are designed to achieve. For those of us involved in product recalls, it is hard to ignore the cha-ching sounds as we wrap our heads around the magnitude of LG’s next-level recall program.

What is the lesson from LG’s experience?

Whilst the practical difficulties of a large-scale product recall cannot be underestimated, the clear lesson based on LG’s experience is: make sure your product recall actually works the first time! With product safety at the top of the ACCC’s list of enforcement priorities and particularly where there is a risk of serious injury or death, failing to get a product recall right may have very expensive consequences for your business.

LG’s voluntary recall

Between 21 January 2016 and 30 June 2019, LG Energy Solution Ltd manufactured batteries for use in residential solar storage systems. Having discovered that the batteries had manufacturing issues that could potentially cause them to catch fire, LG commenced a voluntary global recall of the affected batteries in 2020.

Australia was one of several countries impacted by the global recall given that around 18,054 affected batteries were supplied in Australia through a variety of channels, including batteries imported by LG’s Australian subsidiary and others imported by around 22 third-party Australian distributors. By September 2023, there had been 13 incidents involving affected batteries in Australia resulting in significant property damage and at least one smoke inhalation injury. Clearly, the risk of injury or death was, and is, by no means hypothetical.

Not enough says the Government

By January 2024, nearly four years after the voluntary recall was commenced, 6,235 (35%) affected batteries supplied in Australia had not been remedied, of which 4,950 (27%) had not even been located. Of course, this meant that a significant number of consumers remained completely unaware of the potential risks associated with the batteries installed in their homes.

These “alarmingly low and unsatisfactory” rates of location and remediation of affected batteries in Australia prompted the Assistant Treasurer to intervene by issuing a proposed recall notice for the affected batteries under the Competition and Consumer Act 2010 (Cth), which is a formal step towards a compulsory recall.

Prior to the Assistant Treasurer’s intervention, the communication of the voluntary recall was largely limited to direct contact with affected consumers, digital and social media advertising and providing online resources for affected consumers. However, given the large number of unlocated batteries, the Assistant Treasurer considered it was clear that LG’s actions were insufficient and the communication plan had failed. In short, LG had not done enough to combat the risk faced by affected consumers.

LG’s enforceable undertaking

Following the issue of the proposed recall notice, LG met with the ACCC and offered to increase its efforts and up the ante with an extensive range of additional actions via a Court enforceable undertaking. This led to the Assistant Treasurer ultimately accepting that a compulsory recall was not required.

One of the key features of LG’s undertaking is its commitment to an effective widespread and ongoing communication strategy via television, radio and newspaper advertising to bring awareness of the recall to affected consumers. LG was required to appoint a media specialist to assist in the development, implementation and maintenance of the advertising campaign, which involved three phases. The first two phases ran for approximately 6 months each and the last phase is to continue until the close of the recall. At its peak, during the first 6-month phase, LG was required, at a minimum, to have:

• 15 second television advertisements on all available commercial networks, including 7, 9, 10 and SBS;
• 15 second radio advertisements on at least the three highest listenership stations in metro markets, at least one station in regional markets and the highest listenership stations for the top 10 non-English languages in Australia; and
• quarter page advertisements in the top 2 highest circulation newspapers in each state/territory, national newspapers and ethnic newspapers in the top 10 most spoken languages and Korean newspapers.

The campaign has been subject to a monthly review and optimisation process whereby the approved media specialist is to report on the effectiveness of the campaign having regard to the location, tracing and remediation rates for the recall and is empowered to recommend any reasonably necessary amendments to improve the campaign’s effectiveness. LG’s compliance was also required to be monitored by an independent auditor. This is all on top of the actual costs of remediation and compensation for additional energy costs incurred by affected consumers whilst their solar power has been switched off. Cha-ching, cha-ching, cha-ching!

While the enforceable undertaking has significantly improved pre-January 2024 recall rates, 2,634 unrectified affected batteries remained as at 15 April 2025. [1]

Notwithstanding this, no doubt LG will be looking to cease the Advertising campaign soon by applying to the ACCC to stop the Advertising Campaign on the basis that it has been sufficient, and, in the eyes of the media specialist and an independent auditor, no longer reasonably likely to alert new consumers to the issue who were previously unaware. The pain may not be over yet!

Importantly, whilst there was some acknowledgment by the Assistant Treasurer of the significant costs to LG of a widespread advertising campaign of this magnitude, it certainly didn’t appear to carry much weight. Businesses should expect that the paramount consideration will always be the proper and effective management of the safety risks to affected consumers. In other words, don’t expect a whole lot of sympathy when it comes to the costs of your recall program. The ACCC and the government have shown they are prepared to pressure businesses to ensure they take whatever lengths are required to achieve the desired result.

What should you do?

If your product has a safety issue and you’re not sure what to do, a good place to start is our article Product Recall: aka my product has a safety issue – what to do I do?. This article will step you through some of the important early questions to ask yourself. Once you know that you’re in product recall territory, you will find Addisons’ top ten tips for managing a product recall helpful.

If you need assistance deciding whether a product recall is required or how to implement an effective product recall plan, please contact Addisons’ Competition/Antitrust & Consumer team.