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Focus: Launch of new US product safety information database has international implications

23 December 2010

In brief: Australian manufacturers should be aware of a new product safety information database in the United States that will provide a forum for any person to submit a report about a consumer product that has caused 'harm'. Partner Annette Hughes , Senior Associate Ric Morgan and Lawyer Claire Nicholson look at the database and its global implications.

How does it affect you?

  • The US Consumer Product Safety Commission's (CPSC) publicly available database will publish reports of harm about consumer products, beginning from 11 March 2011.
  • Australian manufacturers or suppliers of consumer goods exported to and imported from the USA will need to monitor and respond to these reports. This will require a strategic approach to responding to any reports of harm, which ensures that the adverse impact on the value of brands is minimised and that liability risks are managed.
  • Receiving notification of a report of harm from the CPSC may trigger the supplier's mandatory reporting obligation under sections 131 and 132 of the Trade Practices (Australian Consumer Law) Amendment Act 2010 (Cth). This issue should be monitored and managed.

Introduction

The structure and operation of the publicly available consumer product safety information database was finalised on 24 November 2010 by the CPSC. Once the database is up and running, any person will be able to submit a 'report of harm' about a consumer product that has caused injury, illness or death, or carries the risk of causing injury, illness or death.

How the database will operate

Those submitting reports of harm will be required to provide their personal details, identify the product and verify the accuracy of the report by checking a box on the form.1 The CPSC will not independently confirm personal details or the reported harm. This leaves the proposed database open to potential corruption from competitors, vexatious complainants or others seeking to advance their own agenda.

Before publishing the report of harm, the CPSC must send it to the manufacturer for a comment to be published on the database.2 The CPSC, however, will publish the report of harm regardless of whether the manufacturer provides a comment.

Manufacturers will be able to challenge information in a report of harm by way of a submission to the CPSC that the information is confidential3 or materially inaccurate.4 If the CPSC determines that the challenged information contains trade secrets, or commercial or financial information that is privileged and confidential, then that information must be removed from the report.5 If the CPSC determines that the challenged information is materially inaccurate, it will not necessarily remove the entire report of harm.6 The CPSC will be more inclined to correct the existing information or include additional information.7

Issues for Australian manufacturers

It is advisable that Australian manufacturers and suppliers begin thinking strategically about how they will monitor and respond to reports of harm regarding their products or products they distribute. This may include:

  • considering the public relations and legal implications arising from a such a report;
  • more practically, establishing an internal procedure that enables a prompt investigation into allegations followed by an appropriate response, which may include providing a manufacturer comment for the database or the potential recall of the product; and
  • checking whether obligations arise under the new mandatory reporting obligations of the Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 (Cth) (the ACL).

Manufacturers and suppliers may have difficulty determining whether the reported harm is materially inaccurate where incidents have been alleged to occur in the USA. This is exacerbated by the fact that they will not be provided with the submitter's details or photographs/medical records without specific consent of the submitter/injured person.

If a manufacturer or supplier does provide a comment, it is important to remember that it will be accessible to competitors and plaintiff lawyers in potential legal actions. Consequently, a manufacturer or supplier's comment must be complete and accurate, and it should not include words that could be interpreted as an admission of liability for the harm alleged, unless appropriate and carefully considered.

Local reporting oblications

Manufacturers and suppliers should also be aware of the mandatory reporting obligation under the ACL commencing on 1 January 2011 and how this obligation interacts with the database. Under the ACL, a supplier of consumer goods or product-related services must notify the Australian Consumer & Competition Commission (the ACCC) within two days of becoming aware that a consumer good has caused or may have caused the death, serious injury or illness of a person. The obligation is not limited to incidents that have occurred in Australia, nor is it limited to Australian products. The mandatory reporting obligation was the subject of a previous Focus. See ACCC releases draft recall and mandatory reporting guidelines.

Compliance with the mandatory reporting obligation as a response to the receipt of a report of harm may result in the ACCC using its product safety warning, recall or banning powers. The ACCC will be able to access the report of harm and any comments from the manufacturer or supplier and consider them in the exercise of its powers. This is extremely likely given that the ACCC has recently stated its intention to be involved in information-sharing arrangements with other organisations.

Conclusion

Before the database comes into operation, manufacturers and suppliers should develop strategies for monitoring and responding to reports of harm and coordinate those strategies with compliance with their obligations under the ACL.

Footnotes
  1. 16 CFR s. 1102.10 (2010).
  2. 16 CFR s. 1102.20(c) (2010).
  3. 16 CFR s. 1102.24 (2010).
  4. 16 CFR s. 1102.26 (2010).
  5. 16 CFR s. 1102.24(f) (2010).
  6. 16 CFR s. 1102.26(g) (2010).
  7. 16 CFR s. 1102.26(h) (2010).

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