The Year Ahead

2013 – What to Watch from the Consumer Product Safety Commission

In a recent article from the law firm of Roetzel & Andress by attorneys, Brian E. Dickerson, John Boudet, Amanda M. Knapp and Jonathan R. Secrest, they outline five (5) areas for companies to watch out for in the New Year with regard to the CPSC.

  1. Commission Membership – currently the commission is made up of two Democratic commissioners and one Republican commissioner.  It is pointed out that President Obama can fill the two vacancies on the Commission this year; however one of those vacancies must be a Republican.  He has the choice of just letting the Commission continue as it is currently.
  2. Civil Penalties – civil penalties were dramatically increased with the passage of the CPISA in 2008 but thus far have not resulted in increased civil penalties for companies.  It was noted in the article that until October 2012, the commission was evenly split between Republican and Democrat commissioners and now with a Democratic majority the expectation is that civil penalties will increase.   An example of this was the 2012 Hewlett-Packard penalty where the number of incidents and the timing of reporting a product defect was the basis of the large civil penalty.
  3. Online Database Rulings – the CPSC’s online database,, was another issue brought forth by the law firm.  They discussed a recent opinion by a U.S. District judge in the matter of Company Doe v. Tenenbaum, where it was held that “the Commission had abused its discretion in seeking to publish a complaint on its online database because it failed to meet the statutory requirement that a compliant of harm be ‘related to’ the product identified in the compliant.”  Since this is the first court challenge to the online database it is uncertain as to if other companies will use judicial review to prevent publication in the database.  Additionally the current case is being appealed and is being joined by several consumer interest groups who are seeking to obtain the identity of the company and the product.
  4. Administrative Complaints – a more aggressive approach by the commission in the filing of administrative complaints and recalls of products was noted.  The case of the manufacturer of “Buckyballs” was used to show how the Commission went from working with the manufacturer on the development of education, packaging and warnings for the product to litigation, product ban and recall.  In addition the Commission showed a wiliness to go directly to retailers, urging them to stop selling the product.  It would seem that the Commission has adopted the stance that warnings are not sufficient to prevent hazards presented by products.
  5. New Section 6(b) Interpretation – section 6(b) of the Consumer Product Safety Act (CPSA) prohibits the Commission from disclosing information about a consumer product and the identity of the manufacturer or private labeler until the Commission has taken “reasonable steps” to assure that the information is accurate and fair.  In a new interpretation of section 6(b) the Commission has stated that it will announce that it is “investigating” a product or company solely on the information provided in an initial or full report submitted under section 15 of the Consumer Product Safety Act (CPSA)

Is your company compliant? Need help in deciphering the law as it pertains to you? Jacoby Solutions can review your companies compliance plan and help you tailor your business operations to ensure you comply.  Contact us to get started today!

New FTC Policy Statement on Labeling

The FTC has announced a new enforcement policy statement designed to put retailers who import textile products on the same footing as those who source textiles domestically or from US importers.

The Textile, Wool and Fur Labeling Acts require that garments be labeled with the fiber content, country of origin if imported and other requirements. The Acts allow for retailers to receive in good faith continuing or separate guarantees from foreign or domestic manufacturers assuring that the products are correctly labeled or promoted. Such guarantees give the retailers a “safe harbor” from the liability of false advertising.

Now the FTC has said it will not enforce against a retailer that directly imports such products unless they “knew or should have known” that the products were incorrectly labeled or promoted.  There are some limits — a retailer will still be liable for products it markets as private label.

Also if the retailer embellishes or misrepresents information provided by the manufacturer in its advertising, liability will also attach.  Of course, retailers may still want to obtain some type of written assurance from foreign suppliers, both for contractual purposes and also for use in potentially deflecting any argument that they “should have known” that the product was improperly labeled or marketed.

These acts are not subject to frequent enforcement but they do subject retailers to significant and expensive compliance obligations. This policy statement is a meaningful step forward to recognition of the global marketplace.


Is your company compliant? Need help in deciphering the law as it pertains to you? Jacoby Solutions can review your companies compliance plan and help you tailor your business operations to ensure you comply.  Contact us to get started today!

Bill Jacoby is the founder principal at Jacoby Solutions and developed the CORE Audit (Compliance Operations Readiness Engagement Audit), the company’s proprietary approach to business operations readiness A one-stop shop for manufacturing and distribution companies in need of a solutions partner who can help them evolve their business while keeping an eye on compliance, Jacoby Solutions saves companies time, money and resources while helping them become CPSIA ready.

Baby Steps: Six steps to improving product liability risk management

In a recent article by Sarah Fang of Saiber LLC titled, “Baby steps:  six steps to improving product liability risk management” Ms. Fang highlights the risks associated with the manufacture of products overseas.  In the article, Ms. Fang points out that in 2012 the Consumer Product Safety Commission (CPSC) ordered the recall of over 312 products of which almost 52% were manufactured in China.  Of those products recalled half were classified as children’s products with most of those having violations ranging from lead paint to burn and strangulation hazards.

The impact of these defective products is felt not only in the area of brand equity and customer loyalty or retention but also in the company’s bottom line.  It was noted in the article that even a small loss in brand value, given the very large U.S. consumer market, can lead to large financial implications for the company.  As noted in a study done by Bain & Co. on customer retention, customers will not remain loyal if the products they buy are defective.  Legal expenses are impacted as well as the cost of defending a product liability claim in U.S. courts is very high.

The article goes on to lay out six areas where companies can mitigate and/or prevent defective products and improve product safety.  Each of the steps happens to be associated with either regulations or rulings by the CPSC with regard to children’s products as found in the “Testing Pertaining to Product Certification Rule” as amended by 16 CFR Part 1107.

  1. Ensure compliance with all code, statute, or product regulations.  As it is with most of the product regulations the CPSC oversees, the expectation is that the manufacturer knows what rules; bans or standards apply to their product and will have tested the product accordingly before it enters the stream of commerce in the U.S.  The CPSC also requires that any mandatory testing be done by one of their accredited laboratories which can now be found in most major overseas production centers around the world.  This initial certification of the product is done so that the manufacturer may issue a Certificate of Conformity or a Children’s Product Certificate (CPC) which is a statement from the manufacturer that the product conforms to all applicable rules, bans or standards that would apply.  The Product Certification Rule goes one step further in requiring the manufacturer to submit a “representative samples” of the product for testing.  The numbers of samples to be submitted is based on the manufacturing process and the total number of products produced in that particular lot, batch or production run.  If any of the samples submitted were to fail a safety standard then it would be deemed that the whole lot, batch or production run is not compliant.  The manufacturer would then need to take the steps needed to investigate and document the failure and submit new samples for re-testing.
  2. Proper documentation and record retention.  The ruling requires manufacturers to keep the following documents (either electronically or in hardcopy) for each children’s product for five years from the date of production; (a) a copy of the Children’s Product Certificate, (b) records of each third party certification test for each manufacturing site, (c) records of testing plans, actual testing and/or results, as applicable, (d) records of the number of representative samples selected for periodic testing and the procedure used to select them, the testing conducted on those samples, and the basis for inferring compliance from the results of those tested samples, (e) records of and descriptions of all material changes in the product, (f) records of the undue influence procedures implemented by the manufacturer including training materials and employee attestations.
  3. Properly manage any and all outsourcing for quality.  Manufactures that rely on third party component suppliers or foreign manufacture finished good suppliers may us the testing or certifications from these suppliers to issue certificates for the finished product.  However the manufacturer must exercise “due care” in accepting these certificate or finished product testing to ensure that all the proper testing has been done and that it was completed by a CPSC accredited laboratory.  Additionally the requirement of sufficient or “representative samples” must be documented along with any initial testing failures and the remedy of those failures.
  4. Contract management.  Manufacturers must carefully draft a proper contract and purchase order that reflect all of the additional documentation and recordkeeping associated with the new periodic testing rule when dealing with both foreign and domestic suppliers, especially if relying on supplier certificates or third-party testing reports for product compliance.
  5. Proper training.  Manufacturers must have a “written statement” by company officials that; states that the exercise of undue influence on third-party laboratories is unacceptable and directs every “appropriate staff member” to receive training on avoiding undue influence.  In addition each staff member that goes through such training must sign a statement attesting to participation in the training.  Manufacturers must also inform employees that allegations of undue influence may be confidentially reported to the CPSC and provide a description of the manner in which such a report can be made.  Manufacturers are required to retrain staff members if there are any changes in the CPSC’s undue influence requirements.
  6. Monitoring product performance.  The new rule requires manufacturers to retest its production batch any time a “material change” has been made that could impact the products continued compliance to the applicable safety rules.  Material change could include such things as; changes in the production design, the manufacturing process, the sourcing of a component part (change in supplier) or the component part itself.
Jacoby Solutions offers Compliance “On Demand” consulting to help small companies deal with their compliance and business operations. Please contact us at 484-885-0707 or email us …. for more information.