Do Companies Have to Report Defective Products?

blueprint.jpgU.S. manufacturers, wholesalers, retailers and others along the sales chain are legally obligated to report potential defects in their products once they become aware of them. One such company recently learned this the hard way.

The U.S. Consumer Product Safety Commission (CPSC) in April fined a leading manufacturer of lawn mowers over $1.5 million because the company failed to report serious problems with its electric lawnmowers. Several consumers had filed complaints about the mowers, saying they started on their own and/or did not turn off, and the company did not respond as required by federal law.

This is the company's fifth fine for non-reporting of defective products since 1986.

Per the Consumer Protection Safety Act (CPSA) passed in 1972, companies - including manufacturers and retailers - must self-report known product defects to the CPSC. These reporting requirements were further reinforced and refined in the Consumer Product Safety Improvement Act of 2008.

When Must a Company Report a Potential Product Hazard? 

A company must notify the CPSC within 24 hours after it receives information that reasonably indicates serious public safety hazards, such as if the product:

• Fails to meet a consumer product safety standard or banning regulation

• Contains a defect that could create a substantial hazard to consumers

• Creates an unreasonable risk of serious injury or death

• Fails to comply with a voluntary standard upon which the CPSC has relied under the CPSA

The information sources a company must use in determining whether a potentially unsafe product should be reported includes:

• Consumer complaints

• Product liability lawsuits

• Independent testing laboratory results

The mower manufacturer's multiple infractions show that federal fines don't always stop companies from behaving badly and knowingly selling substandard products. And the government fines don't provide fair and just compensation to the victims of dangerous goods.

So anyone seriously hurt or who had a loved one killed because of a faulty product may want to consult an attorney who handles defective product lawsuits to review their legal options.

The choice of a lawyer is an important decision that should not be based solely on advertising.


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