The U.S. Consumer Product Safety Commission (CPSC), from all accounts, is finally escalating its enforcement efforts. Recently, the U.S. Department of Justice, on behalf of the CPSC, filed suit against Spectrum Brands Inc. in a Wisconsin federal court. This was the CPSC’s second enforcement lawsuit filed in 2015, a year in which records for CPSC penalties will likely be set. The complaint alleges that Spectrum not only failed to comply with CPSC reporting requirements, but that it also allowed hundreds of defective coffeemakers to be sold after a 2012 recall of the products. The CPSC seeks both civil penalties and injunctive relief. Hopefully, this CPSC-backed lawsuit will be a warning to similarly situated companies and will prompt them to report products containing potential hazards.
The Consumer Product Safety Act (CPSA) requires that manufacturers, distributors and retailers “shall immediately inform” the CPSC of any potential substantial product safety hazards or unreasonable risks of serious injury associated with their products. According to the CPSC, “immediately” means “within 24 hours.” 16 C.F.R. Section 1115.14(e).
This latest lawsuit continues the trend of increased CPSC enforcement. In the past few years, the enforcement trend has been evident in increasing penalties against manufacturers over allegations of unsafe products and associated reporting violations. CPSC Chairman Elliot Kaye has repeatedly stated that the commission will seek higher penalties. Early this year, he announced his plans to authorize the CPSC to issue fines up to the $15 million cap. Further, in an official statement announcing a recent multimillion dollar fine, Chairman Kaye warned:
While this well-deserved civil penalty is not even close to the level Congress authorized and expected when enacting the Consumer Product Safety Improvement Act, I have put violators on notice that we will seek much higher penalties, as appropriate.
The CPSC appears to be serious about backing up Chairman Kaye’s statements. In 2014, the CPSC imposed a record $12.2 million in fines for failure to report product safety hazards or for selling recalled products. That was more than double the $6 million in total penalties assessed in 2013, which was up from $4.3 million in 2012. The total could potentially double again this year; 2015 is not even half over and the CPSC has already fined companies more than $11 million.
The enforcement mandate does not appear targeted at a specific industry or a particular point in the distribution chain. The penalties assessed in the past few years have ranged from retailers to manufacturers, and from home appliances to home furnishings to children’s products. The common theme is reporting violations – including significant delays in reporting multiple events or failure to immediately report a death or serious injury.
Where companies won’t agree to fines, it appears the CPSC is no longer reluctant about filing lawsuits when necessary. Historically, CPSC-backed lawsuits were rare. Before this year, the CPSC had only filed three lawsuits and one administrative complaint, all seeking mandatory recall remedies under Section 15 of the CPSA.
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