Hunton Retail Law Resource

The COVID-19 pandemic has changed most aspects of the economy. The world of consumer products is no exception to this trend. The CPSC has the following notice posted on its website warning that not all recall remedies may be currently available:

This month’s Recall Roundup starts with the wish that the coronavirus could be recalled. Perhaps the would-be CPSC commissioner who could deliver that recall would be unanimously approved.

On the topic of would-be commissioners, President Trump recently announced his intent to nominate Dr. Nancy Beck to be Chairman and Commissioner of the agency. Beck currently serves as the Principal Deputy Assistant Administrator for the EPA’s Office of Chemical Safety and Pollution Prevention. She previously worked in various capacities at the EPA and Office of Management and Budget during the Clinton, Bush and Obama administrations. Beck also worked as the Senior Director for Science Regulatory Policy at the American Chemistry Council, which is a chemical industry lobbyist group.

The new year ushered in a series of warnings from the CPSC about inclined infant sleepers posing suffocation risks and dressers posing tip-over risks to consumers. Both products have been under scrutiny by the CPSC over the past year.

A new bill introduced in Congress earlier this month could increase litigation risk for the retail industry by leaving companies unable to prevent the Consumer Product Safety Commission (CPSC) from disclosing inaccurate or premature information about potential product hazards. The Safety Hazard and Recall Efficiency (SHARE) Information Act, introduced on January 9, 2020, by U.S. Representative Bobby L. Rush (D-IL), would also increase the maximum civil penalty for violations of the Consumer Product Safety Act (CPSA) from $15 million to $50 million. Largely seen as a response to public criticism over the perceived delays in the CPSC’s disclosure of hazards associated with infant inclined sleepers over the last year, the SHARE Information Act would allow the CPSC to tell the public that a product may pose a safety issue before the hazard has been confirmed.

The theme for this Recall Roundup is effectiveness of recalls. In October, the US Senate Committee on Commerce, Science, and Transportation released an investigative report criticizing the CPSC’s data-handling breaches from the spring. This month, the Office of Oversight and Investigations Minority Staff from the same US Senate committee released a report criticizing the CPSC’s handling of three “high-profile failures to effectively recall dangerous products” last year. The report summarizes the CPSC’s actions related to jogging strollers, infant reclined sleeping products and home elevators. The report concludes that the CPSC’s “failures” are “the result of a pattern of inappropriate deference to industry that has characterized CPSC leadership in recent years.” The report recommends that the CPSC “at a minimum” increase the use of imminent health and safety warnings, fine companies that fail to timely report substantial products hazards and use refunds or consumer-friendly repairs as default remedies.

Last month, the CPSC and three affiliated retailers issued a joint warning to consumers after the retailers discovered they sold nearly 1,200 units of 19 previously recalled consumer products between 2014 and 2019. The range of products at issue varied, including infant sleepers, scarves, portable speakers, barstools, children’s cardigan sets, hoverboards, beer mugs, coffee presses and infant rattles. It remains to be seen whether any further CPSC action, such as a civil penalty or a requirement to implement stronger recall systems and protocols, will be taken with respect to these three retailers.

This month, the US Senate Committee on Commerce, Science, and Transportation released its investigative report on the CPSC’s data handling breaches from the spring. In April, the CPSC issued notices to multiple manufacturers explaining that “nonpublic manufacturer information” was released to the public without complying with Section 6(b) of the Consumer Product Safety Act. Section 6(b) prohibits the CPSC from disclosing information reported by product manufacturers without complying with the procedures for and restrictions on the commission’s public disclosure of such information. Section 6(b) aims to incentivize manufacturers to provide more safety information without fear of public backlash. The Senate committee’s report is troubling. It found that the CPSC made “improper disclosures to 29 unique entities” that “contained information on approximately 10,900 unique manufacturers, as well as street addresses, ages, and genders of approximately 30,000 consumers.” The Senate committee reviewed “hundreds of documents and emails and conducted multiple interviews” to conclude that the CPSC’s violations of Section 6(b) “were due to a lack of training, ineffective management, and poor information technology implementation.” The report cited several examples, such as that CPSC employees had “little to no Section 6(b) training” and were provided with “three different software applications to access and process relevant data without the necessary training on how to use these often confusing and idiosyncratic systems.” The Senate committee ended with a list of recommendations for the CPSC to remedy these problems and avoid future data-handling breaches.

With Acting Chairman Ann Marie Buerkle’s earlier announcement  that she will leave the CPSC this fall, this month the commissioners elected Commissioner Robert Adler as the new acting chairman. Adler has been affiliated with the CPSC for more than 40 years. He has served as a commissioner since 2009 and previously served as the acting chairman from December 2013 through July 2014.

This month serves as a reminder to manufacturers, distributors, retailers and importers that consumer products carry strong liability risks when they pose risks of serious injury or death. Steps should be taken to reduce that liability, including the issuance of alerts and recalls to remove the products from the stream of commerce.

With summer in full swing, several U.S. senators have taken a public step to focus the CPSC’s efforts on dangers at the beach. Airborne umbrellas have become a serious hazard to beachgoers. In fact, CPSC data indicates that there have been over 31,000 beach umbrella-related injuries from 2008 to 2017, including the death of a vacationer after she was struck in the torso and killed by a rogue umbrella in Virginia Beach in 2016. In an unusual move, four senators recently issued a letter urging the CPSC to be more proactive about addressing the dangers posed by beach umbrellas. The senators requested more detailed information about umbrella-related injuries, asked about safety standards to prevent such injuries, and encouraged the creation of a public safety campaign to educate the public about the dangers of beach umbrellas.

The balance of power at the CPSC will shift after Acting Chairman Ann Marie Buerkle’s surprising announcement that she will leave the CPSC this fall. Buerkle has served as a CPSC Commissioner for six years and the Acting Chairman of the agency for almost half that time. President Trump has nominated Buerkle to be the permanent Chairman three times (2017, 2018, and 2019), but each time the Senate failed to vote on her nomination. Buerkle announced she is withdrawing her 2019 nomination to become the permanent Chairman and to serve an additional seven-year term. She will continue as Acting Chairman until September 30 and will complete the remainder of her term as Commissioner until October 27. She says that afterward, she will “pursue new opportunities that will allow me to continue my life’s work of advocacy and public service as well as spend more time with my six children and eighteen grandchildren.”

Court rulings interpreting the Consumer Product Safety Act (CSPA) are rare because parties subject to the act typically resolve any issues directly with the CPSC through administrative actions or settlements. This month, the Seventh Circuit issued such a rare ruling, which makes it more difficult for manufacturers, distributors or retailers to argue the statute of limitations has run on failure-to-report claims.

The CPSC this month issued notices to multiple consumer product companies explaining that the CPSC “recently discovered that nonpublic manufacturer information identifying your company by name along with product model name and/or model number was released in error to the public without following the procedures of 15 U.S.C. § 2055,” which provides procedures for and restrictions on the Commission’s public disclosure of manufacturer and product-specific information. The notice offers few details about the unauthorized disclosure’s nature or scope, raising questions about whether the released data comes from inspections, product safety investigations, recalls, consumer safety complaints or other possibly confidential or commercially sensitive information. This kind of disclosure may have a chilling effect going forward on the candor encouraged between the CPSC and regulated companies by Section 6(b) of the Consumer Product Safety Act.

The U.S. Department of Justice announced major news in the world of consumer products this month. A federal grand jury recently indicted two corporate executives for their roles in an alleged scheme involving residential dehumidifiers. The executives were charged with conspiracy to commit wire fraud, conspiracy to defraud the CPSC, and failure to furnish timely information under the Consumer Product Safety Act.

With the partial federal government shutdown over, the CPSC appears to be quickly returning to normal—it issued 18 recalls in this month. The agency also took an unusual and noteworthy step by issuing notice that the CPSC would regard clothing storage units that do not meet the industry standard designed to reduce tip-over events to have a defect which could present a substantial product hazard.

The partial federal government shutdown forced the U.S. Consumer Product Safety Commission (“CPSC” or “Commission”) along with other agencies to close for 35 days. In fact, the last recall on the Commission’s website is dated December 20, 2018—two days before the unprecedented shutdown began.

December was a quiet month in the world of recalls for two reasons. First, there were only 19 product recalls—the second lowest number of monthly recalls in 2019. Second, the partial federal government shutdown has forced the CPSC along with other agencies to close until President Trump and Congress can resolve their well-publicized funding dispute.

With a new commissioner confirmed in September, the Commission once again has five commissioners. A philosophical divide along party lines surfaced this month in two decisions.

The first decision involved the settlement of an administrative lawsuit filed by the CPSC in February. The lawsuit alleged that a distributor refused to recall three-wheeled jogging strollers after consumer complaints that the front wheel can detach suddenly during use, causing injuries to at least 50 children and 47 adults. To settle the lawsuit, the distributor agreed to notify dealers and retailers and to “develop and launch an information campaign that will include an instructional video demonstrating how to safely and correctly operate” the stroller.  Eligible consumers who participate in this campaign can receive “incentives,” such as hardware to repair the stroller or a 20% discount towards the purchase of a new stroller from the same distributor.

October began with a CPSC announcement that a major retailer agreed to pay a $3.85M civil penalty for failing to report that a trash can it sold contained a defect or created an unreasonable risk of serious injury. The retailer sold 367,000 of the trash cans nationwide between December 2013 and May 2015. Allegedly the trash can’s plastic collar may dislodge, exposing a sharp edge and posing a laceration hazard to consumers. The retailer received 92 consumer complaints about this alleged defect but did not immediately notify the CPSC of the defect. The CPSC announced a recall of the trash can in July 2015. In addition to the civil penalty, the retailer agreed to maintain a compliance program and a system of internal controls and procedures to ensure it discloses information to the CPSC in accordance with applicable law. The Commission voted unanimously (4-0) to accept the settlement.

September ushered in a shift in political power at the CPSC with the confirmation of a new commissioner. In June, the U.S. Senate confirmed President Trump’s nomination of Dana Baiocco—a Republican—to the CPSC. Commissioner Baiocco’s appointment created the potential for a 2-2 voting tie if issues presented to the CPSC give rise to voting along party lines. One CPSC vacancy remained for which President Trump nominated Peter Feldman—another Republican—in June to both complete the remainder of former Commissioner Joe Mohorovic’s term, which expires in October 2019, and to serve a full seven-year term starting in October 2019. 

On August 29, 2018, despite industry criticism, the California state legislature passed AB 2998 (the “Bill”), which will require that levels of chemical flame retardants in covered products be below 1,000 parts per million. The Bill, which the governor is expected to sign into law, states that starting January 1, 2020, distributing children’s products, mattresses and upholstered furniture containing most chemical flame retardants will be illegal in the state of California. Samples of covered products sold to consumers will be provided to California’s Department of Toxic Substances Control for testing, and if a product is found to be noncompliant, a fine may be assessed against the manufacturer, distributor and/or retailer. 

This month marks the 10th anniversary of the Consumer Product Safety Improvement Act (“CPSIA”), which was signed into law on August 14, 2008. CPSIA was a bipartisan response to unsettling events in the world of consumer products that occurred in 2007. During that landmark year, reports emerged about lead contamination in a wide range of consumer products—including children’s toys—that forced the CPSC into the national spotlight and facilitated over 400 recalls. The CPSIA aimed to significantly enhance the CPSC’s regulatory and enforcement power by doubling its budget, increasing its staff levels, prohibiting the sale of recalled products and increasing its civil penalties. For example, before CPSIA, the CPSC could impose civil penalties in the amount of $8,000 per violation, with a maximum of $1.825 million. But in 2008, CPSIA increased significantly the amount of civil penalties to $100,000 per violation, with a maximum of $15 million, adjusted for inflation.

July served as another quiet month in the world of recalls. With only 11 recalls issued, July has had the fewest recalls for any month in over a year.

The CPSC made an important announcement this month regarding cedar chests. A company designed cedar chests with lids that automatically lock when closed. The company stopped making the cedar chests in 1987. From 1977 to 2015, 14 children have suffocated to death after climbing into the cedar chests and becoming locked inside. During this time, the company recalled 12 million cedar chests and offered a replacement latch to remedy the defect. Still, the CPSC predicts that millions of these cedar chests remain unfixed in consumers’ homes, posing a continuing danger to children. The CPSC’s announcement served as a plea urging consumers to immediately replace or remove the dangerous latches.

It has been a quiet month in the world of recalls with only 13 product recalls issued in June. Still, other CPSC-related news is noteworthy.

Last month, the U.S. Senate confirmed President Trump’s appointment of Dana Baiocco to serve as a CPSC commissioner. If political ideology translates into voting trends on consumer safety issues—and it may not—Baiocco’s appointment creates a potential 2-2 voting “tie” at the CPSC, with two Republican and two Democratic commissioners. Now, Trump seeks to add a third Republican to the CPSC. On June 4, 2018, Trump nominated Peter Feldman to be a commissioner. Feldman is senior counsel to the U.S. Senate Committee on Commerce, Science and Transportation, and therefore advises on consumer protection, product safety, data and privacy issues. If confirmed, Feldman will complete the remainder of former Commissioner Joe Mohorovic’s term, which expires in October 2019. Feldman’s confirmation would mean that for the first time in nearly 12 years, Republican appointees would outnumber Democratic appointees at the CPSC. 

The CPSC experienced a political shake-up this month when the U.S. Senate confirmed Dana Baiocco as the newest commissioner. In September, President Trump nominated Baiocco, a Republican and former partner at Jones Day, but the Senate did not act on the nomination by the end of the 2017 calendar year. So President Trump resubmitted his nomination of Baiocco in January. On May 22, 2018, the Senate confirmed Baiocco by a vote of 50-45, mostly along party lines. Her seven-year term will run through October of 2024.

April was an historic month for the CPSC. The agency approved a $27.25 million civil penalty—the largest in CPSC history. The significance of this record amount cannot be overstated. The previous record was held by a $15.45 million civil penalty approved in March of 2016. In fact, except for in 2016, the CPSC has never approved civil penalties that totaled $27.25 million in each of the last ten calendar years. Now, it is has done so in 2018 with just one civil penalty.

On the heels of a recent $5 million civil penalty, the CPSC recently secured a $1.5 million civil penalty with help from the U.S. Department of Justice (“DOJ”). The civil penalty concludes a long saga between the CPSC and a large arts and crafts retailer about vases with allegedly defective thin glass that rendered them prone to shattering.

The CPSC has flexed its regulatory muscle during the first months of 2018 with respect to products that pose risks to children. With the U.S. Department of Justice’s (“DOJ’s”) help, the CPSC secured a $5 million civil penalty against a drug company for its allegedly deficient child-resistant packaging. In December, the DOJ filed a complaint in federal court against the drug company alleging that it knowingly violated the Poison Prevention Packaging Act and the Consumer Product Safety Act by distributing five household prescription drugs with non-compliant child-resistant packaging and failing to report the noncompliance to the CPSC. The complaint alleges that the drug company’s engineers drafted a “risk analysis” memo identifying the packaging as non-compliant. Rather than halt distribution and immediately report the non-compliance to the CPSC, the drug company continued distribution with non-compliant packaging while concurrently developing compliant packaging. The company also waited nearly 15 months before notifying the CPSC of its non-compliant packaging. In January, the federal court entered a consent decree for the matter. The drug company agreed to pay a $5 million civil penalty, implement and maintain a compliance program, and maintain and enforce a system of internal controls and procedures.

With the arrival of 2018, President Trump resubmitted his nominations for CPSC leadership vacancies to the Senate. In 2017, Trump nominated Commissioner Ann Marie Buerkle to serve as CPSC Chair and Dana Baiocco to serve as a commissioner replacing Democrat Commissioner Marietta Robinson, whose term expired. But, under Senate rules, nominations not acted on are returned to the President. At the end of the Senate’s 2017 session, this meant that roughly 120 nominations were returned to Trump. Both nominees—Buerkle and Baiocco—are expected to receive Senate confirmation this year.

A reflection on 2017 reveals several highlights showing that the CPSC is in a transition phase.

The CPSC’s composition has changed and will continue to do so. At the beginning of 2017, the agency was led by three Democrats and two Republicans. In October, Republican Commissioner Joseph Mohorovic resigned his seat to return to the private sector. Thus, the CPSC now has four commissioners: three Democrats and one Republican. But the Democrats’ grip on the agency will soon slip. Indeed, after the election of President Trump, Republican Commissioner Ann Marie Buerkle became the CPSC chair. Further, President Trump has nominated a private-sector lawyer named Dana Baiocco to replace Commissioner Marietta Robinson, a Democrat whose term has expired. Further, an additional Republican nominee is expected to fill Mohorovic’s resignation. Thus, 2018 will likely see a Republican majority leading the CSPC for the first time in over a decade.

There is plenty of recall activity to report but no civil penalty news to report for November. Perhaps the holiday spirit prevails at the CPSC in this holiday season.

Hoverboards were last year’s hottest toy during the holiday season, but they also caused alarm due to the tendency of their lithium-ion battery packs to overheat while charging, causing the hoverboards to catch fire or explode. This year, the CPSC is taking a proactive approach to hoverboards. In May and again this month, hoverboards by the same manufacturer caused house fires and prompted the CPSC to warn consumers to stop using those hoverboards altogether. Further, a hoverboard by a different manufacturer recently caught fire and caused $40,000 of property damage to a consumer’s home. These serious reports culminated in the CPSC issuing seven recalls this month for hoverboards by different manufacturers due to their potential fire and explosion hazards.

October ushered in a case that might, on one hand, provoke a sigh of relief for manufacturers, distributors and retailers concerned about the upward trend in multimillion dollar civil penalties from the CPSC or, on the other hand, raise some eyebrows of concern about the extent of a court’s authority to prospectively impose auditing, compliance and training measures. See United States v. Spectrum Brands, Inc., No. 15-CV-371-WMC, 2017 WL 4339677 (W.D. Wis. Sept. 29, 2017).

Last month, the solar eclipse captivated the United States and many consumers flocked to purchase solar eclipse glasses to safely observe the astronomical phenomenon. We previously reported how NASA issued a safety alert advising consumers on the proper eye protection they should seek. Now, some consumers have filed a class action lawsuit against a major online retailer for allegedly selling “unfit, extremely dangerous, and/or defective” solar eclipse glasses. As a result, the consumers allege “varying degrees of eye injury ranging from temporary discomfort to permanent blindness.”

August was a busy month in the world of recalls. First, the end of August ushered in a hefty $5.7 million civil penalty against a major retailer in the United States. The retailer was allegedly selling and distributing recalled products and has agreed, in addition to the civil penalty, to maintain a compliance program and a system of internal controls and procedures. The CPSC voted 4 to 1 to accept the settlement, with Acting Chairman Buerkle voting to accept a lower civil penalty.

As an update to our Recall Roundup’s focus on the fidget spinning craze from June and July, the Consumer Product Safety Commission (“CPSC”) has released spinner safety tips. Although the CPSC still reports no fidget spinner recalls, Acting Chairman Ann Marie Buerkle used the CPSC’s bully pulpit to warn of the choking dangers that result when fidget spinners break and release small pieces. In addition, she references “reports of fires involving battery-operated fidget spinners.” 

On July 26, 2017, an amusement ride named “Fire Ball” at the Ohio State Fair broke apart, killing one passenger and injuring seven others. This deadly incident may trigger a CPSC investigation into the matter.

Prior to 1981, the CPSC exercised jurisdiction over all amusement rides. But after several high-profile cases challenged the CPSC’s jurisdiction over amusement rides with mixed results, an amusement parks trade group successfully lobbied Congress to exempt stationary amusement rides from the CPSC’s jurisdiction. In 1981, Congress passed the Consumer Product Safety Amendments, which amended the definition of “consumer product” to explicitly exempt stationary amusement rides.

June commenced with another massive civil penalty. A manufacturer agreed to pay a $5.2 million civil penalty and maintain a compliance program for allegedly failing to immediately report defective floorboards in recreational off-highway vehicles. In a three-year period, the manufacturer received over 400 reports of floorboards cracking or breaking in one vehicle model and over 150 similar reports in two other models. Once the manufacturer filed its report, it allegedly underreported the number of floorboard incidents associated with one model and failed to identify altogether the floorboard incidents associated with the two other models. These omissions, according to CPSC staff, constituted a material misrepresentation. The CPSC accepted the settlement by a 4-to-1 vote.

May’s 30 recalls—more than any month thus far in 2017—cover furniture, toys, appliances, lithium batteries, recreational vehicles, kitchen gadgets and more. Conspicuously absent so far from the list are fidget spinners, the now viral children’s toy making headlines recently for choking-related dangers. Retailers catching up to the hot demand should keep an eye on those warnings to see if they convert into recall activity in case the gadget is deemed worthy of a market exit that rivals the pace of its entry. In light of the CPSC’s willingness to impose penalties on retailers who sell recalled items, retailers should take stock of their recall plans of action.

April served as a microcosm for recent trends in the world of recalls. A gas range manufacturer agreed to pay a $4.65 million civil penalty to the CPSC. In a six-year period, the manufacturer received 170 incident reports that the gas ranges had turned on spontaneously and could not be turned off using the control knobs. But the manufacturer knowingly failed to notify the CPSC immediately. The manufacturer agreed to pay the massive penalty, maintain an enhanced compliance program and maintain a related system of internal controls and procedures.

March was an eventful month in the world of recalls. Children’s products have always been a CPSC focus, and for good reason. A recent study by Nationwide Children’s Hospital examined data over a 21-year period and found that a young child visits the emergency room for an accident involving a nursey product about every eight minutes. That is roughly 66,000 children annually. Last month alone, children’s products were the subject of six recalls. That trend continued in March as six children’s products were again recalled—infant caps, toys, games, sleepwear, bibs and rattles. The CPSC also approved unanimously a new federal safety standard for infant bath tubs. This serves as a notable development because, under the 1981 Amendments to the Consumer Product Safety Act, the CPSC must defer to an existing industry standard if it adequately addresses the risk and fosters adequate compliance. Accordingly, the CPSC has only issued 37 safety standards and roughly one-third of them (14) are for children’s products. The new standard serves as additional evidence that the CPSC is taking a more proactive approach to regulating children’s products.

The CPSC extracted another steep civil penalty this month from a manufacturer of coffee brewers that agreed to pay $5.8 million after it knowingly failed to report a defect or unreasonable risk of serious injury to the CPSC. Specifically, the manufacturer received roughly 200 reports in a four-year period about its coffee brewers spraying out hot liquids and coffee, inflicting burn-related injuries to consumers. As part of the settlement, the manufacturer also agreed to develop, implement and maintain a compliance program to avoid failure-to-report problems in the future. Perhaps the recent change in CPSC leadership will impact the frequency or amount of these civil penalties in the future.

With a new administration in the White House comes new leadership at the Consumer Product Safety Commission (“CPSC”). The CPSC has five commissioners, all of which are Former President Obama appointees, though no more than three may share the same political party affiliation. Commissioner Elliot Kaye—a Democrat—served as the CPSC’s Chairman until this month, when Commissioner Ann Marie Buerkle—a Republican—was named Acting Chairman. Kaye will continue to serve as a commissioner and Buerkle will remain Acting Chairman until President Trump nominates and the Senate confirms a permanent replacement. Before joining the CPSC in 2013, Buerkle represented New York’s 25th Congressional District in the House of Representatives and served as the U.S. Representative to the 66th Session of the United Nations General Assembly.

The beginning of the New Year experienced a drop off in recalls as the busy holiday season came to a close. Nevertheless, two important trends developed throughout January.

As we previously reported, Kelly Faglioni, a partner in our Product Liability group, authored an article identifying and discussing approaches for managing risk that arises from complexity and ambiguity in product regulatory schemes including approaches to the question: “To recall or not to recall?”

As we previously reported, Kelly Faglioni, a partner in our Product Liability group, authored an article highlighting the sources of ambiguity in the law that governs products in the U.S. and discusses that ambiguity as a purposeful tool in the regulatory tool belt. This post discusses Part 2 of her article. 

Your product group is planning for the debut of the company’s most exciting new widget. Being responsible company citizens, the group checks in with the legal department to confirm the product regulatory and risk landscape. They start with the seemingly simple questions: “What are the applicable laws and regulations?” and “What are the foreseeable risk scenarios and associated damage potential?” Rather than answers, questions ensue. For example, what are the product components and/or ingredients? Will the product or its components contain anything toxic, corrosive, irritating, sensitizing, flammable or combustible? What are the foreseeable dangers associated with the product? What kind of product claims are envisioned? And so on.

Civil penalties continue to serve as a reminder that noncompliance with the Consumer Product Safety Act can be costly. A major retailer agreed to pay a $3.8 million penalty for failure to implement an internal compliance program for the distribution and sale of recalled products. The retailer sold about 600 recalled products over a five-year period, a pattern of behavior that continued even after informing the CPSC that measures were in place to reduce this risk.

November brought a reminder that civil penalties are the trend to watch from the CPSC when a pet goods retailer agreed to a $4.25 million penalty for failing to immediately report to CPSC an alleged defect in fish bowls at risk of breaking, which posed a risk to purchasers of cutting themselves. CPSC’s data shows a hefty increase in the amount of civil penalties extracted, ranging from a low of $700,000 to a high of $4.3 million in fiscal year 2015 and a low of $2 million to a whopping high of $15.45 million in fiscal year 2016. Virtually all of those instances involved a “failure to report” or delay in reporting.

October was filled with frights as malfunctioning electronics took center stage. With personal panic devices failing to operate and diving computers posing drowning risks, manufacturers should keep in mind that life-threatening hazards dramatically increase their potential liability.

The following consumer protection actions made headlines this week:

Self-Regulatory

Zeltiq’s CoolSculpt Claims Referred to FTC and FDA

On October 5, 2016, the NAD referred advertising claims from Zeltiq Aesthetics, Inc., to the FTC and the U.S. Food and Drug Administration (“FDA”) for Zeltiq’s “CoolSculpting Cryolipolysis Body Contouring System,” a medical device that, according to the advertiser, uses a cooling treatment to target fat cells beneath the skin. The device is FDA approved, and the NAD found that the claims that the product is “FDA-cleared” and would result in a “slimmer you” were supported. However, the NAD recommended that Zeltiq add further disclosures about how the product works. Zeltiq said that it would comply with most, but not all, of NAD’s recommendations; per NAD procedure, the matter will be referred to the FTC and FDA.

Much ado about lithium-ion batteries. If you have watched the news, you have seen that certain smartphones have been recalled due to fire and burn hazards posed by the phones’ lithium-ion batteries. While this recall is important, it is not unique. This year alone, at least nine other companies have issued recalls due to problems with lithium-ion batteries. These recalls include video baby monitors, batteries in laptop computers, batteries in flashlights and other battery packs. Not to mention last year’s slew of recalls over the most popular holiday gift – the hoverboard. While there are advantages to lithium-ion batteries, such as their recharge capability and their low memory effect, there are risks to using them in household electronic devices. Manufacturers must assess these risks when rolling products out to the public. Companies could not only face an expensive recall, but also a potential shift in public perception of the quality of its devices that could have repercussions long after the initial recall is over.

Hunton & Williams LLP focuses on product issues ranging from compliance, recall issues, investigations and products-related litigation in state and federal courts and in various administrative forums. Our lawyers have managed and consulted on recall or potential recall issues for a number of clients requiring involvement with the Consumer Product Safety Commission, the Federal Trade Commission, the Food and Drug Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the state attorneys general. Our lawyers have conducted broad-based federal and 50-state research to identify applicable regulatory schemes, consulted with clients regarding compliance strategy and litigation risk management issues, and litigated numerous products liability claims (gas controls, valves, water heaters, tires) in state and federal courts.