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Product Recall: Get Prepared Now

David Bond
09/04/2021

Locations

United Kingdom

When Benjamin Franklin allegedly coined the phrase "by failing to prepare, you are preparing to fail", it's a reasonable bet that he wasn't referring specifically to the issue of product recalls.  And yet it is a mantra that carries as much weight to retailers, suppliers, distributors and consumer product manufacturers in the 21st century when deciding how to approach this sensitive and often neglected issue.

Surprisingly, the reality is that most organisations only engage with the issue of product recalls when the first email lands on the GC's desk notifying them of a customer complaint and potential product recall issue.  Arguably this is far too late to be able to deal with the issue strategically and effectively.  In effect, the horse has already bolted. 

The purpose of this article is to briefly summarise some of the key issues that all companies in the product supply chain should be considering right now to help best navigate what to do in the event that a consumer product safety issue arises.

Formulate a Product Recall Plan now

When it comes to consumer product safety, you have to be prepared well in advance so that when an issue arises you are ahead of the game.  Formulating a plan early is essential to enable you to act quickly and efficiently when questions as to the safety of a product arise. 

Such a plan should identify the person responsible for leading and responding to any product recall issues and include arrangements for periodic review and sign off from your senior management.  In addition it should be reviewed by your product safety lawyers to ensure that the plan complies with relevant product safety and consumer protection laws.

Key elements of the plan should include:

  • a product traceability dimension to ensure that you know in advance how you can identify products and their key components;
  • a customer traceability plan so that you can ensure that customer contact information is systemically captured;  
  • provision for early sharing of information with the relevant authority concerning any issue emerging from product safety monitoring activity because producers, importers and distributors are legally required to notify a relevant authority if they know that a product they have placed on the market or supplied is unsafe and may potentially need to be recalled or other action is necessary; and
  • a process for investigating incidents and carrying out risk assessments.  A documented risk assessment should be undertaken where there is sufficient and reasonable evidence that a hazard would occur under conditions of foreseeable use and known misuse of a product.

Prepare for the Corrective Actions in advance

You should ensure that your plan makes it clear how decisions on corrective action will be made, by whom and within what timescales, and a communications plan to ensure that the right organisations and individuals are contacted. 

The plan should require that any corrective action is proportionate to the level of risk posed by the unsafe product in question.  We would recommend establishing a sliding scale of risk from serious or high risk to medium risk and low risk.  Examples of immediate action that would normally be taken if there is a serious risk might include isolating the product stocks whereas a medium risk might be limited to preventing further distribution of products in the distribution chain.

Communication is key

Dealing with a product recall can often seem like firefighting.  That's why communications should be prepared well before the decision to undertake a product recall is made.  You will need to manage communications with consumers so it will be essential to have competent staff handling enquiries and provide clear advice to consumers on next steps.  Staff will require training on the technical issues arising as well as a Q+A document regularly updated during the corrective action period.  Note that any customer contact information should only be maintained in accordance with data protection laws.

You should also have a media strategy in mind.  Businesses need to ensure that they have a spokesperson who can appear in the media to stay in control of the information and help avoid any speculation.

Implementing the Corrective Actions

As soon as you've established that there's a product issue, you'll want to establish what the proportionate corrective action is.  A product recall will not always be necessary or proportionate to the risk.  The law in relation to consumer product safety issues in the UK derives from the General Product Safety Regulations 2005 (SI 2005/1803) ("GPSR") which in turn is derived from the EU General Product Safety Directive (2001/95/EC) ("GPSD").

The GPSR requires that if a producer faces a product safety issue, it should determine and implement the most appropriate corrective action in order to safeguard consumers.  Corrective action is not limited to product recall.  Depending on the nature of the hazard, the level of risk identified and the type of product, other examples of action include:

  • withdrawal of products from sale and distribution;
  • product disposal; and
  • offering consumers the choice to replace, and exchange or repair the product.

You should always check your plan to ensure that the detail of actions required of and information provided to the relevant partners, consumers, the relevant authority and media is correct. 

The most effective corrective actions are where consumers can be identified and communicated with directly.  Always check the records generated at retail point of sale as well as internet retail records or any other ways that you can identify the affected consumers.

Launching a Product Recall

If you've checked your plan, carried out a risk assessment and determined that a product recall will likely be necessary then it is important that you manage the recall process carefully.

Once you know that there is a safety issue with a product that has been placed on the market, you have a duty to notify the relevant authority and provide information about the affected product including the batch number so that it can be identified easily and traced.   Note that there doesn't need to have been an incident involving personal injury or property damage prior to such notification.

There are time limits that you must comply with.  You should notify the relevant authority without delay and within ten days of obtaining reportable information if the risk isn't acutely serious.  If there is a serious risk, then this notification should take place within three days.  Clearly if there's an outright emergency, then you must inform them immediately and without delay.

Concluding the Corrective Actions

The primary purpose of a corrective action is to bring the product risk to the attention of affected consumers and to enable them to adopt your recommended corrective measures as quickly as possible.  If the proposed corrective action involves a request for customers to complete the corrective action themselves, the risk assessment should consider whether it is appropriate to make such a request.  Factors for consideration should include the ability of the customer to perform the task safely, satisfactorily and without negative impact on the environment, having particular regard to vulnerable consumers. 

While it is sometimes appropriate to instruct consumers to dispose of the product themselves, you should consider the desirability of making sure that the product in question is permanently removed from the market place e.g. by linking refunds to sending items back via freepost.  Note that the use of incentives to encourage the return of products, such as linking this to the provision of gift vouchers or discounts, can motivate customers to return products and should be considered. 

Ensure that you also prepare a suitable recall notice with enough information about the product so that consumers will be aware if they're affected and what steps they need to take.  Details on the actual communication channels to be used for a particular incident will be based on a number of factors such as the target audience, the seriousness of the risk and the scale and geography of the product distribution. 

You may be able to convey the message by any one or combination of the following: letters to suppliers and end-users, web postings, email or text message alerts, social media, posters at the point of sale, and advertisements in national newspapers.

There is generally no set point at which a corrective action programme is deemed to have been successfully completed. The relevant authority who you have notified may request update reports as to the success rate of any corrective action that is undertaken or request additional measures.

Check your contract

If you are affected by a product safety issue then there will be a financial cost.  This financial outlay will include the resources involved in investigating and launching the corrective action, as well as any refunds or repairs to consumers.  In very serious circumstances, you may even need to compensate consumers for injury or property damage. 

As a result, you will want to ensure that you have robust provisions in your contracts with the product manufacturer to ensure that they provide appropriate contractual safeguards to protect you in this scenario.  This may include, for example, warranties and indemnities for third party claims.  In addition, you will want to ensure that the manufacturer's liability is not capped so that you can make an appropriate claim where required.  You should always speak to expert commercial lawyers to ensure that your contracts protect you for these situations.

International issues

Finally, if you are an international business you will need to consider very carefully what to do if you need to take a multi-jurisdictional corrective action.  For example, if you are a retailer selling products in various countries then you will need to co-ordinate and communicate with your customers in these countries if you are required to take corrective action.  Ensure that you have adequate personnel who can assist you with this process in each country.

Prior to Brexit, the UK was part of a Europe-wide information system to facilitate the sharing of information about enforcement activities and unsafe products including the EU Safety Gate (formerly the RAPEX Rapid Alert System).  Following Brexit, non-compliant products placed on the UK market will no longer be published on the EU Safety Gate.  If an unsafe product is sold within the UK and the EU, previously only one notification to the relevant authority was required, however it now seems likely that a notification must be made in both the UK and then separately via the EU Safety Gate to notify members states of the EU. 

Conclusion

Product recalls are expensive and time consuming.  They can also, of course, seriously damage the reputation of the product and the company's brand.  So it's best to start planning now for how you will deal with this situation that might arise at any time. 

Therefore be proactive and ensure that you have prepared a detailed plan that complies with product safety laws and provides you with a roadmap for dealing with an appropriate corrective action.  This will make it far easier and more cost effective to manage the process when disaster strikes.

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