Tag: CPSC

What the Promotional Products Industry Can Learn from Williams-Sonoma

~ Rick Brenner ~ Leave a comment

Staying Silent Can Cost You

In the Fall of 2002, Ann Brown, head of the U.S. Consumer Products Safety Commission (CPSC), proclaimed that San Francisco-based Williams-Sonoma was “leading the way on recall effectiveness” as she honored the company with her prestigious Chairman’s Commendation.  “Williams-Sonoma has demonstrated their commitment to consumer safety, by ensuring that customers were properly notified of a dangerous recalled product.”  Unfortunately for this upscale retailer, Ms. Brown is no longer at the Commission and it is not 2002.  This May, in a stunning reversal of fortune, CPSC has smacked Williams-Sonoma with a whopping $987,500 civil penalty for failure to timely report a product defect. Draconian as it seems, this stunning and eye-popping penalty may soon seem modest.  Well-informed sources predict it is only a precursor of much larger penalties in the works.  The message of the 2013 Commission is clear: Follow the letter of the law or be prepared to pay an astronomical penalty and then be compelled to follow the law with a costly CPSC-imposed mandatory compliance program.

So what can distributors and suppliers in the promotional industry learn from this case that they can use to protect their businesses?

Williams-Sonoma ran afoul of the critical Section 15(b) reporting requirements of the Consumer Product Safety Act.  Among other obligations, Section 15 requires manufacturers, importers, distributors and retailers of consumer products to notify the Commission immediately whenever the company has information that one of its products contains a defect which could create a substantial hazard or creates an unreasonable risk of serious injury or death.   Strategy #1: Assign a senior person in your company to learn the Section 15 reporting requirements.

Change a few details and the story of what happened to Williams-Sonoma could have happened to any company in our industry – promotional products suppliers who import product and distributors who sell it.  In this case, William-Sonoma did both.  In 2003 they began importing wooden hammock stands to sell through their Pottery Barn division.  From 2003–2008, Pottery Barn sold 30,000 units.  According to CPSC, when the hammock stand is used outdoors its metal brackets can trap moisture causing the wooden beams to rot over time behind the bracket and giving no outward sign until someone sits in the hammock and the beam breaks.   During this five-year span the company received 45 complaints of which 12 incidents required some medical attention.  The Commission claims that Williams-Sonoma knew by late 2006 – after it had received eight complaints – that the product had a defect which created a substantial product hazard, however Williams-Sonoma did not file a Section 15 report with CPSC until September 2008 – two years later!

If this case was typical, Williams-Sonoma most likely learned about the defective hammocks through a variety of customer interactions that may not have been passed on to one central repository.  Some customers might have placed warranty claims and only mentioned the bumps and bruises in passing.  Others might have come in to a store for a refund, written a letter, called an 800 number, complained via a Web contact form or even posted on CPSC’s new “Safer Products” site.  Whether a company is large or small, information – even bad news – can permanently reside in silos when the people receiving the information don’t appreciate its implication or aren’t aware of related incidents.  Without specific training and a robust initiative, employees in the field might receive a customer complaint—perhaps over the phone or in passing during an unrelated conversation—and dismiss it as insignificant, not their responsibility or not serious enough to report.   Teach your team that every product complaint is potentially significant.  Every complaint, claim, or incident report should be relayed to a central repository, logged and followed-up on thoroughly.  Be sure to have a trained individual call the consumer to discuss what happened and to make sure your incident report is accurate and that no details have been sugarcoated.  Ask for the product to be returned so you can see for yourself what went wrong and determine whether the issue constitutes a substantial product hazard.   Strategy #2: Educate employees to communicate every product related complaint to one person or department knowledgeable about Section 15 requirements, who has the authority to report to CPSC or to quickly raise the reporting issue to someone who does.  Investigate every incident thoroughly and get first-hand information about what happened whenever you can.  Ask for the product back to carefully evaluate what went wrong and whether further action is required. 

A common myth, and why some companies may not report, is the fear that Section 15 reports will automatically result in a costly “corrective action”, a term CPSC uses to refer to any remedial action taken by a firm, including recalls.  CPSC denies this myth in an FAQ on its website:  “Reporting a product to the Commission under section 15 of the CPSA does not mean that the Commission automatically will conclude that the product creates a substantial product hazard or that corrective action is necessary.”  Instead, CPSC contends that aside from helping the Commission to identify substantial product hazards that Congress established the Section 15 reporting requirements to encourage “widespread reporting…. to help identify risks that the Commission could address through voluntary or mandatory standards, or information and education.”   I posed this myth question to a prominent product safety attorney who regularly practices before the Commission.  He confirmed that many Section 15 reports result in no action and advised that companies should err on the side of “over-reporting.”   Indeed, the risks inherent in a Williams-Sonoma-sized civil penalty alone should inform any company’s consideration of whether or not to report.  Strategy #3: Err on the side of “over-reporting” when you learn of a product defect that could create a substantial hazard.  If the risk is not substantial, CPSC will not likely take action.  If the risk is substantial and you do not report, the potential civil penalties can be massive.  This Commission has already shown in the Williams-Sonoma and Kolcraft [1]matters that it will not hesitate to invoke stiff penalties for late reporting.

CPSC allows Section 15 reports to be filed through it’s SaferProducts.gov website, by mail, or by telephone, and can be submitted by the reporting company or its attorney.  The most important thing is to file the report timely, however it is always advisable when dealing with regulatory agencies to do so with the advice of an experienced attorney who specializes in that area of the law.  Reporting companies should be prepared with the information that CPSC staff will need to evaluate the product hazard and determine if further action is required.   The more organized and complete a company’s records are, the easier time it will have responding to Commission staff queries.  The initial questions are what you would expect: What is the product?  Who is the manufacturer or importer?  Where is the product sold?  What is the defect, injury or risk?   How many units have been sold?  How many complaints or incidents involving the product have been reported?  Were there any injuries reported?  If the investigation continues beyond an initial stage, the information requested by CPSC can get much more detailed.  Strategy #4: Keep complete and accurate records about the products you sell.  This should include such product related items as sales and purchasing records, test reports, history of complaints, warranty claims, returns, and any other relevant information you may have.  The information should be stored in a database and easily searchable by the individual you empower to evaluate product defects and make Section 15 reports.

It is very easy – actually tempting – to read about someone else’s misfortune and assume for one reason or another that it can’t happen to you.  But if you sell consumer products – and our entire industry does – it can happen to you and maybe easier than you think.  Product defects that that have the potential to cause injury can happen to any company that makes or sells products.  Consider this: Williams-Sonoma has a long history of managing recalls – so much so that CPSC recognized its outstanding systems a decade ago.  Yet even with a compliance staff, a sophisticated database tracking system and a history of managing recalls effectively, a serious product defect fell through the cracks and cost the company dearly.  Take the time to evaluate your company’s system for evaluating products, for logging and monitoring complaints, returns and claims, and for determining whether any product related issue has the potential to create a product hazard substantial enough to warrant a Section 15 report.  Strategy #5: Just as you would monitor any other Key Performance Indicator, establish KPIs for monitoring your systems for tracking product related issues to ensure that no potential product hazard falls through the cracks to later become an albatross for your company.

[1] In March 2013, two months before the Williams-Sonoma civil penalty, Kolcraft Enterprises Inc. of Chicago agreed to pay a $400,000 civil penalty for failure to timely report defects involving faulty latches on the sides of several of the play yard products it manufactured for Carter’s, Sesame Street and others.  In both the Kolcraft and Williams-Sonoma Settlement Agreements CPSC imposed mandatory compliance programs.

This article appears in the August 2013 issue of PPB Magazine

CPSC Press Release – Williams Sonoma Civil Penalty and Links to Commissioner Statements

Settlement Agreement Between CPSC and Williams-Sonoma

 

Could Your Promotional Products Business Withstand a Recall?

~ Rick Brenner ~ Leave a comment

Just for a moment try to imagine that a promotional product you sold to your largest customer has suddenly become the subject of a government recall.  Hundreds or even thousands of consumers have to be notified immediately that it may be dangerous to use the item that was given to them as a gift.  And to be sure there’s no confusion, pictures have to be posted in multiple locations and on the Internet showing the ill-fated product with your customers logo displayed next to the danger warnings.  The product you chose is now a public albatross for everyone involved.  The recall and legal costs are almost certainly going to be enormous, as is the liability exposure.  And to top it off, the incident is a colossal embarrassment for you and for your client.

Try to imagine the pain of what that would feel like, especially if you could have avoided it all – including the potential loss of a prized customer – with just an ounce of prevention.

Recalls happen for a variety of reasons but most of them revolve around the risk of injury to consumers.  Government regulations are established to ensure safe products so violation of any regulation can trigger a recall.  If your promotion includes a food product that isn’t properly labeled with allergens the FDA can mandate a recall.  CPSC can do the same for products that contain more lead than allowed by CPSIA or toys that fail to pass the toy safety standard.

Recalls come about in a lot of different ways.  It could start with something as simple as a call from your client that someone reported an injury or that the product shattered when it fell on the floor.  Sometimes a consumer advocacy group will test a product and report to CPSC that it contains excessive lead, phthalates or fails some other mandatory test.

For consumer products, the law requires immediate notification of the Consumer Products Safety Commission (CPSC) when a company obtains information that supports a conclusion that a product distributed in commerce fails to meet a product standard or contains a defect that can create a substantial risk or injury to consumers. If CPSC staff concludes that a recall is warranted, they will usually suggest a “voluntary recall” although the Commission has the right to enforce a mandatory recall.  FDA has similar procedures for the products it regulates.  Promotional products that fall within FDA oversight include hand sanitizer, sunglasses, first aid kits as well as food and food contact items.

As painful as a recall can be, failure to report can be even worse.  Sometimes a company will find out about an injury or that a product it distributed has failed a test, and will try to handle it on its own, without involving the governmental agency, perhaps by notifying customers to return the item.  CPSC is particularly unforgiving in these instances no matter how sincere or thorough a company may be in its attempt to self-resolve the issue.  Public Citizen, a watchdog group, reports that between 2002 and 2007 CPSC fined companies an average of $452,000 for failure to report, filing late reports or withholding key details from the agency such as information about customer complaints.  In more recent cases the agency has become even more aggressive with some fines in excess of $1 million.

So what about that ounce of prevention?  What are some things you can do to prevent a product safety nightmare?  The answers may seem obvious or common sense but you’d be surprised how easy they can be to overlook when you’re stressed or rushing to complete a last minute promotion.

  1. Slow down.  Take the time to understand the promotion and how the client is going to use the product.  Who is the intended audience? Are children involved?  How old are the children?
  2. How well do you know the supplier and the supplier’s products?  What do you know about the supplier’s processes to ensure safe and compliant products?  What tests are conducted, by whom and how often?
  3. Did you obtain an actual sample of the product?   How well is it constructed?  Does it have any sharp edges?  Could the material shatter?  Can you foresee any safety issues?
  4. Is the product a potential choke hazard for children?  If so, does it have proper warnings?
  5. Is the product an electric product?  If so, does it have an independent lab safety rating, such as by Underwriters Laboratory?
  6. Have you researched whether there any state or Federal regulations that apply to the product or its packaging?  If so, have you received current test reports from the supplier and had a qualified person confirm that the test reports are thorough and that the product meets all required standards.  (PPAI has a very good tool on its website called Turbo Test which can help identify any applicable regulations.)
  7. Does your client have any testing requirements that go beyond the state and Federal requirements?  Some companies require a product to pass children’s product or toy standards even if they aren’t children’s products.

Most of us have owned a product that was involved in a recall sometime during our lives.  Maybe it was a car or a coffee pot, a battery or a crib.   Mistakes happen even to the most sterling and trustworthy brands.  Search “product recall” on Google and your hits will include Mercedes Benz, BMW, GE, Apple Computer, and Fisher Price.

But while you can’t guarantee immunity from every problem, if you’re a savvy shopper, learn the risk factors and always do your homework, you’ll exponentially reduce the risk of a product safety fiasco.

Is it a toy? We may find out soon.

~ Rick Brenner ~ Leave a comment

Think you know a toy when you see one?  We should soon find out if the Consumer Product Safety Commission agrees with you.

At last month’s PPAI Product Safety Summit in Denver, CPSC Director of Regulatory Enforcement Mary Toro told attendees that the Commission is working on new guidance regarding toys.   The implication for suppliers in the promotional products industry is significant – whether “executive toys” like stress relievers, puzzles and desktop games will fall under the CPSIA toy definition.  If these products do fall under CPSIA, the law requires that they undergo much more expensive testing than other children’s products.

Ever since the Consumer Product Safety Improvement Act (CPSIA) was signed into law by President Bush in August 2008 there has been controversy about the definitions that Congress wrote into the Act for children’s products and for toys.  For children’s products Congress said that the product had to be “intended primarily for children 12 years of age or younger.”   For toys, Congress left out the word primarily stating simply that “the term children’s toy means a consumer product designed or intended by the manufacturer for a child 12 years of age or younger for use by the child when the child plays.”

In September 2008, at the first public meeting CPSC held after the law was enacted, I posed a question to CPSC senior staffers about executive toys and specifically about stress relievers.  Another attendee asked about an executive basketball hoop that mounts on the back of an office door and is distributed as a free gift with Quervo tequila. Neither one of these examples is sold for  young kids, particularly the liquor promotion.   Cheryl Falvey, the chief legal counsel for CPSC, said that the staff would have to consider these questions carefully but noted that because Congress didn’t say they had to be primarily for 12 and under that it would be difficult question.  She also added, “..as a mother I can tell you that it’s likely they’ll end up at home in the toy box.”

More than a year later, at an ICPHSO product safety conference in February 2010, I again posed the same question to Ms. Falvey. She noted that the Commission was working on a new guidance document to help clarify the ambiguities surrounding the term children’s product.  That document, entitled Final Interpretive Rule on Definition of Children’s Products, was released later that year and approved by the Commission in September 2010.  But while it provided guidance on how to determine if a product is a “children’s product” under CPSIA, it didn’t answer the open questions about toys – and particularly about executive toys.

What’s at stake?   Potentially tens of thousands of dollars per year in third party testing for suppliers who have executive toys in their line.   For children’s products, CPSIA requires third party lead testing – relatively inexpensive tests that are usually no more than $50 and sometimes much less.  But for children’s toys, the Act requires more. Toys must comply with the many provisions of a 67 page Toy Safety Standard known as ASTM F963.  This used to be a voluntary standard but in CPSIA Congress made it mandatory. In addition, toys cannot contain more than .1 percent of six different phthalates.   ASTM F963 testing and phthalate testing are not inexpensive like lead tests. F963 testing runs upwards of $500 for a single toy and phthalate testing can be even more.  We typically budget at least $1,500 per toy for testing.

To be sure, there are many suppliers who will commission ASTM F963 testing even if their executive toys are not covered by CPSIA, Prime included.  The toy safety standard includes many tests that confirm the quality and integrity of a product – drop tests, sharp edges, choke hazard, material quality, etc.  But for products marketed primarily to adults, it will give much more flexibility to the industry if suppliers have the choice on a product by product basis to conduct their own risk analysis and determine what to test rather than a government mandate.  Hopefully the Commission will feel the same way.

“Good morning. I’m calling from the Consumer Products Safety Commission.”

~ Rick Brenner ~ Leave a comment

It isn’t hard to imagine how the call would go.

“Hello, Mr. XYZ Promotional Products Supplier?  I’d like to speak to the owner or president of your company.  I’m calling from the Consumer Products Safety Commission.”

“Yes, I’m the owner of XYZ.  How can I help you?”

“Good morning sir.  Well, sir, we received a complaint from one of the consumer advocacy groups we work with that you manufactured a children’s backpack that doesn’t comply with the law.  We sent a few samples to our lab here in Bethesda and they were right.  The handle of this bag tested at 1,700 ppm and the fabric was over 500.”

“Children’s backpack?”  We don’t sell children’s backpacks.”

“Hmm.  Well the label inside says XYZ.  Is that you?”

“Yes, but we don’t sell children’s products!  We sell business to business.”

“Well, it doesn’t really matter who you sold it to.  The one I’m looking at has a scene on the front of three little bears heading to a red schoolhouse.  The developmental psychologists over in our Department of Human Factors tell us this bag age grades from 6-9 years old.  That makes it a children’s product.”

“Bears, red schoolhouse?   We don’t sell any children’s products.

“Well, do you know how these bears got on this bag?”

“I don’t know about any bears.  We just print whatever art the customer sends us.  We only have a few hours to get these bags through the factory and into the UPS truck.  We’re focused on getting the registration correct, getting a crisp imprint, matching the customers colors and meeting the in-hands date.  We don’t pay attention to what the image is or what the slogan means.  Most of our workers don’t even speak English.”

“Well, you might want to rethink that process, Mr. XYZ.  As far as our agency is concerned you manufactured a children’s product that doesn’t comply with the law.   We’re referring this matter over to our recall folks.  You’ll want to have a discussion with them as soon as possible.”

This hypothetical story would be cute if it wasn’t so serious.  If that backpack order was for 10,000 bags and CPSC “suggested” a recall, the cost to everyone – supplier, distributor and end-buyer – could easily run into six figures.  The legal fees alone …well, you know that story.

So how did we get here and what is the solution?

The problem started because Congress didn’t have the promotional products industry in mind when they wrote the Consumer Product Safety Improvement Act (CPSIA).  They were targeting companies like Mattel and Hasbro – companies that produce children’s products and toys for a specific age range.  In fact, the very first criteria that Congress wrote into the law for determining whether a product is a children’s product is …”A statement by a manufacturer about the intended use of such product, including a label on such product if such statement is reasonable.”

Suppliers in the promotional products industry usually don’t have any idea how an end-buyer is going to use a product.   Many times the distributor doesn’t even know – particularly in a bid situation or when an order comes in over the Internet.   Yet, unless distributors and suppliers both know the intended use of a product, it’s difficult to be sure that the product will comply with CPSIA.  Distributors won’t know that they should select compliant product and suppliers have no indication other than the artwork.

Even if a supplier takes the time to evaluate the art, it can be challenging from the image or slogan to figure out who the product is intended for.  Winnie the Pooh is easy.  A less obvious but equally juvenile design is not.

So what are some possible solutions for our industry?   Together with colleagues and PPAI, I’ve met with CPSC senior staff and here are some solutions we’ve discussed.

1) Suppliers can identify in their lines each product that could possibly be regarded by CPSC as a children’s product, either because it innately fits the children’s product definition or because it could become a children’s product after being imprinted with a juvenile image.  Then, if each of these products is manufactured and tested to CPSIA children’s product standards, there is no issue.   No one would have to evaluate art or worry about who a particular order is intended for because EVERY product complies.

2)  Another option is for suppliers to indicate in their catalogs, website, on ESP and SAGE, the specific products in their line that have been manufactured and tested as meeting CPSIA children’s product standards.  This option is a little more risky than option 1 because it requires more vigilance by everyone.  If a distributor sends in a juvenile imprint order for one of the products that isn’t marked as compliant and the supplier produces and ships it, then liability for everyone is still an issue.  This option could work if distributors and suppliers have good communication and orders are clearly marked as “intended for children”.  eDistributors who receive orders over the Internet should require customers to answer a question about the intended use of the product – whether it is intended for young children – and the response should be included on the corresponding order to their supplier.

The one thing that none of us in the industry can afford to do is to ignore this issue or assume it’s someone else’s problem.   This is a case where it really does take a village – everyone working together – supplier, distributor and end-buyer – so we make sure we all get it right.   Who is the product intended for?  Are children involved?   If so, select only products which have been manufactured and tested as compliant with CPSIA standards.   On that issue, there is no other option.

The Problem with Test Reports

~ Rick Brenner ~ Leave a comment

It was one of our hottest selling bags and we were flat out-of-stock.  At least a dozen backorders had already piled up by the time the container with 150,000 new pieces finally arrived at our receiving dock.

The product, a polyester backpack with a zippered pocket, came in four colors, each with a matching coated zipper pull.  The arriving pieces should have gone into production as fast as the container was unloaded.  Instead, I received a chilling email from my in-house testing lab:

Product failed XRF test upon receipt. Lead: 4,600 ppm in surface coating of zipper pull. Shipment quarantined.

4,600!  The legal limit was 600 ppm if those bags were decorated for children.  How could it be?  Didn’t we have a pristine test report from a major third party lab just weeks earlier?

Yes, it was true.  This shipment failed but weeks earlier we had received a current test report in which the same product from the same factory passed every test with flying colors, and from one of the most respected CPSC-certified labs in the world.   What could have gone wrong?

A lot went wrong, we learned.  To begin with, the sample that was sent to the testing lab was made from a different batch of material than the production pieces.   That’s not unusual.  As long as the product spec, bill of materials and factory doesn’t change you shouldn’t have to send every batch to be third party tested.

But that’s the point.  Something obviously did change but no one knew about it.   Maybe not even the factory.  It’s the same thing that happened to all those Barbie Dolls® back in 2007.  In this case it was the zipper pull.  The production pieces were sprayed with a different coating than the sample.

So what can we learn from this incident?   Does it mean you can’t rely on third party test reports?

No, the report was fine.   The sample that passed the test was fine.  The problem was the factory, not the testing lab.

Factories assemble products from raw materials and components that they buy from other suppliers.  A bag factory will buy fabric, lining, metal, paint, grommets, thread, handles, wheel assemblies, binding, and whatever else they need from a a variety of sources.   If they are required to make a product that complies with 100 ppm lead, that’s what they’ll specify to their suppliers.  But how many factories are equipped as we are to scan every incoming shipment to verify that it complies with the spec?  Very few, if any, in my experience.  They rely on the integrity of their supply chain and sometimes that supply chain lets them down.

The problem could be with just a portion of an order.  Maybe the factory runs out of a particular material and needs a little extra to complete the order.  But their main supplier is out of stock, or won’t accept orders for small quantities.  So the factory goes elsewhere to fill the need.  Maybe the extra material complies, maybe not.

It’s why Prime and other quality suppliers who buy from dozens of factories in China and elsewhere can’t rely on a once per year third party test report.  In our case, we’ve had our testing lab in-house since October 2007 – to check every incoming shipment, no matter what the previous test report says.   Other quality oriented suppliers in the industry do the same, either in China or in the US.

The most important lesson is to understand that compliance is not a destination.  It’s not something that you do once or periodically.  It’s a journey, day in and day out.  The process never stops.  Whatever you did yesterday means little for the product that is produced tomorrow unless you work as hard at being vigilant tomorrow as you did yesterday.

For distributors the lesson is to know your supplier well.  Understand that test reports are only one indication of a good compliance program.  There are many suppliers in the industry with rock solid compliance programs that you can rely on.   Visit with your suppliers whenever you can, either in person or at trade shows, ask to meet or speak with their compliance officer.  Ask what kinds of checks and balances the supplier uses to guarantee consistent, safe and compliant product.

Remember:  In a great compliance program third party test reports are just the tip of the iceberg.