The Consumer Product Safety Commission (CPSC) has made it clear time and time again that product manufacturers may not make product design changes for safety reasons, without considering whether those changes need to be reported to the CPSC. Failing to comply can lead to millions of dollars in fines.
Under Section 15 of the Consumer Product Safety Act, product manufacturers and importers must report substantial product hazards to the CPSC. The CPSC tends to view design changes responding to injury reports as proof that the company “knows” the product had a safety issue. If the company does not immediately report the underlying injury situation to CPSC, it faces severe fines.
The latest example of this phenomenon was announced last week. Baja Motorsports allegedly received several reports of injuries and unintended accelerations in its motorized vehicles. It made design changes, but according to CPSC, took its time reporting the underlying hazard to CPSC. This delay has now cost Baja Motorsports $4.3 million.
BNA / Bloomberg recently interviewed Schiff Hardin about the penalty and what it means for manufacturers. As we made clear, product design changes need to be thought through for possible reporting to CPSC, and companies need a regulatory reporting compliance plan in place to ensure that design changes are not made without consideration of regulatory reporting responsibilities. You can read a free reprint of the BNA/ Bloomberg article here.