Title: Planning for and Implementing a Product Recall
Abstract: WITH THE unparalleled and continued expansion of the global economy, product manufacturers must develop a keen awareness of the laws and regulations of the jurisdictions in which their products are distributed and sold. The importance of foreseeing and planning for multi-jurisdiction product recalls cannot be overemphasized. As distribution systems become more efficient and legal systems more sophisticated, the frequency, costs, and global reach of such recalls will continue to increase dramatically. The development of an effective plan to deal with the inevitable product recall is therefore imperative. Product recalls can present a major crisis for a manufacturer, potentially involving adverse media publicity, and in the case of a public company, a negative effect on stock price. A product recall that is not handled properly, effectively, and efficiently can result in permanent damage to the product brand, reduced profits, and loss of reputation and goodwill with consumers. Manufacturers, distributors, and retailers must have a plan in place to ensure that defective products are quickly removed from the marketplace and distribution chain in order to reduce those risks. Manufacturers, often in conjunction with outside counsel with product recall and product liability experience, should also establish a coordinated media response, an appropriate litigation strategy, and ensure that senior executives work together as they make critical decisions. In seeking to manage a product recall, which can include the replacement, retrofitting, and/or refurbishing of the product, a manufacturer will have a number of considerations in mind. First and foremost is the need to protect consumers from injury, as their interests must always be paramount. Closely aligned with this priority is the duty to comply with regulatory requirements. Next is the natural desire of the manufacturer to ensure that any product recall or product safety campaign should help to avoid or at least mitigate potential product liability. Finally, the manufacturer will wish to minimize or, where possible, avoid altogether collateral damage either to product goodwill, or to the company's overall reputation. These objectives should never be regarded as conflicting; indeed, if the first two are achieved, the second two frequently follow. The immediate priority of every product recall should be to bring the product risk to the attention of affected consumers and to enable them to adopt the company's chosen corrective measures as quickly as possible. Regulatory compliance is an important component of every product recall and many jurisdictions, particularly the United States and the European Union, have mandatory reporting requirements in place. Moreover, in the United States, for example, various governmental agencies are involved in at least some aspects of a company's product recall depending on the product involved. Those agencies include the Consumer Product Safety Commission, the Food and Drug Administration, the Environmental Protection Agency, the Federal Aviation Administration, the Department of Transportation, the Department of Agriculture, and the National Highway Traffic and Safety Administration. Each of those agencies has different reporting requirements and has available specific legal means to effectuate recalls if the manufacturer is hesitant or fails to do so when it otherwise should. This legislative authority includes both criminal and civil penalties and the ability to obtain restraining orders and injunctions to remove the product from the market and halt its immediate distribution. Manufacturers should have an established plan or protocol to deal with a recall situation and to cooperate fully with the appropriate governmental agency. Because time is usually of the essence, it is important to ensure that manufacturers (with the assistance of others in the supply chain) are in a position to implement corrective measures as quickly and effectively as possible. …
Publication Year: 2007
Publication Date: 2007-07-01
Language: en
Type: article
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Cited By Count: 4
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