A phone call comes in on your company’s consumer care line “Excuse me, but your product has caused me an injury”.
You ask for photos of the offending product and the alleged injury and when they come through, you open them with trepidation. Sadly, there is no doubt. The photos clearly tell the story. And there is your product, featured in the photo, trademark and all.
So where to from here?
Step 1: Do you need to conduct a recall?
When use of your product has resulted in a consumer injury, it doesn’t mean that your entire suite of products of the same type are necessarily at fault. What caused the injury to the consumer? Was it a manufacturing defect with the product? Was there something about the design of the product that made it inherently dangerous?
Conduct any tests that you require on the product. Technical tests can be useful to determine the root cause of the fault. Any discussions with the injured consumer need to be carefully framed at this point and while you are waiting for those results so that your company does not automatically admit any liability, without actually knowing whether the product itself was at fault or whether there was something specific or irregular about that consumer’s use, handling or maintenance of the product.
Check customer call logs and determine whether there are any other reports of injuries, issues or complaints with this or any product you sell that is similar to it.
When you have the information in front of you, it is time to make a determination. Under the Australian Consumer Law (ACL), where a “consumer good” has been identified as posing a safety risk to consumers in Australia, the supplier of that product must initiate a recall of that product.
Circumstances in which a product will be considered to pose a safety risk to consumers include instances where:
- the product will or may cause injury to a person; and/or
- a reasonably foreseeable use (including a misuse) of the product will or may cause injury to a person.
Sometimes, where customers are using the product in an unusual manner, it may not be “reasonably foreseeable” that they were ever intending to use it that way. Tilting backwards on a chair and having the leg snap may be a reasonably foreseeable misuse of the product – however, performing acrobatics on the same chair, perhaps not quite so reasonably foreseeable. Your product only has to be safe for any use or reasonably foreseeable misuse.
Concerningly, at this stage, you have now determined that your product has a safety defect. Time for action.
Step 2: How to conduct a product recall
First thing to know is if your company becomes aware that a consumer good which it has supplied has, or has potentially, resulted in the death of, or serious injury/illness of a consumer, you must notify the ACCC within 2 days of becoming aware of that event.
You also need to initiate a recall as quickly as possible and get your products out of circulation as fast as possible.
You must notify the ACCC in writing of the details of a product recall within 48 hours of initiating that recall. This can be done by submitting an online form which is available here. The maximum penalty that may be imposed on a company for failing to notify the ACCC within 48 hours of initiating a recall is $16,650.
You then need to prepare your communications to consumers carefully:
- You need to include specific requirements in your communications including providing consumers with a full remedy, contact details and what to do to obtain the remedy you are offering. This means you will need to repair or replace the unsafe product or provide the consumer with a full refund.
- Do not use the word “voluntary” in any communications to consumers. The ACCC will make you delete it. Yes, technically it is a voluntary recall in that it is driven by you as a supplier, but it’s still required by legislation.
Now is also the time to remember your insurance – if you have a product recall insurance policy (or similar), you should notify your insurer.
Note that if your product is a specific type of good governed by another authority your regulator may change. For example, the Therapeutic Goods Administration governs medical devices and products, and if your product is edible, the regulator for all recalls is Food Standards Australia New Zealand. Check the appropriate regulator before starting any recall as their requirements and processes differ.
Step 3 – Keep good records and report
The ACCC likes to keep a close watch on recalls and how they are going.
Regular reports to the ACCC are part of a recall so keep records of exactly how many people have responded and what has happened to each of the products you have onsite, in storage, with any reseller etc.
Should your communications plan yield low results (in that consumers are not responding, the product is not being returned and there are a large number of products still out there), the ACCC may require you to ramp up communications or try a different forum to reach consumers with the affected products.
When the numbers of people returning or replacing stabilise and the ACCC considers those numbers reflect a good response/return rate, you will be told that you no longer need to file reports.
The good news is once the decision is made to recall products, the legal requirements associated with recalls are largely straightforward. The difficulty is always the judgement call associated with whether you need to recall a product, and the scope of that recall. Need help? Please contact Laura Hartley or Julie Allen for specific advice on your circumstances.
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