Consumer product companies are facing unprecedented scrutiny as the Consumer Product Safety Commission (CPSC) intensifies its regulatory oversight. With heightened civil penalties, increased monitoring of e-commerce platforms, and publication of unilateral press releases, CPSC is exerting significant pressure on the consumer product industry. In light of CPSC’s increasingly aggressive stance, it is more important than ever that consumer product companies take proactive measures to ensure that their products are safe and compliant with applicable regulations.
The Consumer Product Safety Act (CPSA) requires that companies report to CPSC within 24 hours of obtaining reportable information. Companies violate the CPSA if they knowingly fail to report actual or presumed knowledge of reportable information. Failure to report to CPSC can result in millions of dollars of fines.
Given the short timeframe for reporting information to CPSC, it is essential for consumer product companies to implement product safety compliance programs (PSCPs). As explained at this year’s International Consumer Product Health and Safety Organization symposium (read the first, second, and third installment of our ICPHSO series), a PSCP serves as a structured framework of policies and procedures designed to ensure compliance with all relevant safety standards and regulations. Typically, a PSCP encompasses a range of activities such as risk assessment, product testing, quality control, and ongoing monitoring of regulatory changes. By proactively establishing a PSCP, companies can mitigate risk by preventing safety incidents and ensuring efficient management of issues as they arise.
To most effectively engage in proactive risk management, companies should foster a culture with an emphasis on product safety and compliance. An effective PSCP starts at the top—to promote a culture of safety at all levels, senior management must demonstrate a commitment to compliance, setting the tone for the entire organization. Management can encourage a safety-forward culture in which employees feel comfortable reporting concerns without fear of retaliation.
For example, executives and managers should create clear reporting protocols for employees who observe potential safety issues and provide ongoing training and education on safety and compliance. This kind of employee engagement can instill a culture of safety throughout the organization and lead to more effective identification of potential hazards.
Companies should also consider implementing systems to monitor and identify trends in product safety issues. Continuous monitoring enables companies to continually enhance their PSCPs by incorporating trend analysis and feedback from both employees and consumers. For example, using data analytics to track incidents, complaints, and returns can help companies identify recurring issues and proactively address potential safety concerns.
Companies can assess their PSCPs against government expectations by comparing them to the Department of Justice’s (DOJ) Evaluation of Corporate Compliance Programs guidance, which lays out factors that DOJ prosecutors consider when evaluating the compliance program of a company facing a criminal enforcement action. Companies can also benchmark their compliance programs against government expectations by comparing them to consent decrees agreed to by companies that negotiated civil and criminal penalties with CPSC, in addition to previous enhanced compliance measures imposed by DOJ following companies’ failure to report safety risks. For example, DOJ has required companies to implement written standards, policies, and procedures documenting potential product hazards, to establish confidential reporting programs for employees who wish to disclose concerns relating to product safety, and to ensure the compliance program is effectively communicated to employees.
Through continuous monitoring and improvement, companies can learn from past incidents, stay updated on best practices, and make necessary adjustments to safety procedures.
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