So what is the CPSC’s “fast track recall” program and what is the benefit of participating in it? What is a “stop sale notice” and why does the CPSC generally request it for fast track recalls? What else is required by the CPSC in order to participate in the program and what are the potential downsides? When should a company utilize fast track? These are common questions for companies who believe they could have a product safety issue and are already seriously considering a voluntary recall.
What is the CPSC “Fast Track Recall” Program?
In the CPSC’s own words:
The fast track recall program helps consumers by removing potentially hazardous products from the marketplace as quickly and efficiently as possible and rewards businesses that act quickly.”
The consumer and company benefits of the fast track program are relatively simple. In exchange for a company reporting a safety issue and being prepared to quickly initiate a recall (within 20 business days), the CPSC will forego making a preliminary determination (“PD”) of whether the product presents a substantial product hazard and will also shepherd the recall through the agency quicker than if the company filed a normal Section 15(b) report. Some companies wish to avoid a PD for product liability reasons and many simply want to speed up the recall process.
What is a “Stop Sale” Notice?
A stop sale notice is a communication made to retailers and distributors asking them to stop selling or distributing a product in order to prevent additional products that are potentially defective from reaching consumers. In order to participate in the fast track recall program, the agency traditionally expects a company to have already issued or be willing to issue a stop sale notice to retailers and distributors relatively quickly.
This makes sense from a safety point of view because the implication of filing a fast track recall report is that you have a problematic product and intend to conduct a recall. When conducting a recall, it is easier and safer to stop sale beforehand rather than trying to get those same products back from consumers. Further, from a product liability standpoint it’s often not prudent to keep selling a product when you know and in effect have told the CPSC it’s potentially defective.
For this reason, stopping sale would usually be an early and prudent action even if you cannot be sure that the CPSC will ultimately agree with the proposed corrective action plan (often referred to as a “CAP”). If you’re not ready to stop sale, then you’re also probably not ready to file for fast track and will run the risk of being removed from the program should the CPSC compliance staff determine a stop sale should be issued and you’re unwilling to issue one.
If you are unsure about issuing a stop sale notice, then you should consider filing a normal section 15(b) report. If you still wish to file a fast track report, then you should also be prepared to offer the CPSC compliance staff a good justification for why a stop sale should not be issued. In a circumstance where a corrective action plan is agreed to and will be executed fairly quickly, for example, it may simply cause less supply chain confusion to forego a stop sale notice and make only one communication regarding the recall.
What Else is Usually Required to Participate in CPSC’s Fast Track Program?
In addition to the stop sale notice, participation in the fast-track program also generally requires the following:
- Full Section 15(b) report,
- CPSC-approved remedy for consumers,
- Joint press release with the CPSC,
- Point-of-purchase posters,
- CPSC-approved reverse logistics plan,
- Proposed website recall notification,
- Letters to the distribution chain, and
- Proposed social media announcement.
Not all of these items are required at the time of filing and it is not uncommon for initial fast track reports to be incomplete. Keep in mind, however, that the CPSC compliance officer likely will want to have the missing information soon thereafter.
What are the Potential Downsides of Utilizing the Fast Track Program?
The fast track program is not perfect. For example, stakeholders in the regulated community have recently complained that the CPSC asks companies to have everything ready for fast track recalls within 20 business days but then sometimes takes much longer to approve the recall announcements because it too heavily scrutinizes proposed corrective action plans. There is also a risk that the CPSC and the company will not be able to agree on a recall remedy, the wording of a press release, a reverse logistics plan, the timing of the announcement, or other details of the recall.
If a company cannot reach an agreement with the CPSC, however, the company can remove itself from the fast track recall program and undergo a normal recall investigation. Granted, the company will have potentially already issued a stop sale throughout its supply chain and indicated at least some minimal level of safety risk to CPSC. These potential downsides should be carefully weighed against all other considerations prior to choosing to participate in the fast track recall program though.
When Should a Company Utilize Fast Track?
When clients ask about utilizing the fast track recall program versus making a regular report to the CPSC, our counsel is that the fast track program is not for companies who wish to merely report to the agency and may or may not conduct a recall. Generally, that type of report should be made through the normal Section 15(b) reporting process.
Instead, the fast track program is intended for companies that are ready and willing to conduct a recall regardless of whether they are just proactively proposing to recall a product that poses a low risk or because there is a clear hazard associated with the product. In terms of situations where fast track may not be an ideal option, the CPSC’s fast track recall webpage states that companies may choose not to participate in fast track in circumstances where:
- There are complex technical issues that require more time to resolve;
- The decision has not already been made to work on a potential voluntary corrective action with the CPSC; or
- A company is unable to move quickly enough to meet the fast track deadlines.
Utilizing CPSC’s fast track recall program will not make sense for every company and in all situations. Generally though, if you are ready to conduct a recall and have confidence in the efficacy of your proposed corrective action plan, then the fast track option may be preferable to filing a normal Section 15(b) report.