If your company is involved in a product recall, there are certain federal regulations that must be followed. But in addition to complying with the law, a well-handled recall can help ensure customers trust your company and its products in the future.
As an example of a company that engages in good business practices, Nordstrom has been cited by the Consumer Product Safety Commission (CPSC). In one incident, a customer called Nordstrom to inquire about returning a sweatshirt because her child choked on the zipper pull. The retailer immediately notified all store managers by e-mail to pull the sweatshirts from the floor. A report was quickly filed with the CPSC via the Internet. Nordstrom also promptly announced to consumers the hazard and its offer to exchange the sweatshirt or provide a full refund using a press release, video news release, newspaper advertisements and in-store posters.
Every recall is different, depending on the product and its defect. Below is a checklist of actions to take in a recall, adapted from information from the CPSC. A company may not have to take all of these actions. The recalling firm works with the CPSC to determine what is appropriate.
The main objective of the actions on the checklist is to reach as many owners of the recalled products as possible and to make the remedy easy for consumers so it encourages them to act.
- Identify the defect or safety issue.
- Stop production.
- Isolate the inventory to be recalled.
- Determine the appropriate remedy.
- Test replacement or repair.Repair or dispose of units on hand and units returned under the recall.
- Discuss all aspects of the issue with CPSC Compliance staff.
- Redesign future production to eliminate the hazard.
- Change the model/serial numbers on redesigned products. If changes are made to existing products, label to distinguish from recalled products.
- Give retailers notice of recall well before the public announcement.
- Provide retailers information to readily identify recalled products, such as UPC codes, date codes, model numbers and other critical identifying data.
- Give retailers information on in-transit shipments that may contain the recalled product.
- Ask retailers to stop the sale and isolate the inventory of recalled products. Give instructions on returning or disposing of products so they are not released for sale.
- Provide retailers with recall posters to display in conspicuous locations.
- Inform retailers of the remedy -- recall, repair, replace or refund. Work with them on the disposition of consumer returns (for example, return to manufacturer, disposal or repair).
- Ask retailers to maintain an accurate accounting of product inventory.
- Ask retailers to review records and identify likely customers by using information from extended warranties, credit card bills, catalog sales, etc.
- Work with retailers on how they will receive credit/refunds for recalled products.
- Provide a special "retailers-only" phone number for their inquiries.
- Anticipate CPSC investigator monitoring of the recall at retail stores.
- Prepare questions and answers for media and consumer inquiries with the CPSC.
- Issue a joint recall press release (all language must be worked out with the CPSC Compliance staff). This document forms the basis for all consumer notices. It should include all pertinent information, including the number of incidents and injuries and descriptions of each. It should also give clear descriptions of defects and hazards, describe how to obtain remedy, provide a toll-free number and include the recalling firm's website address. For media inquiries, list contact names and numbers for the recalling firm and the CPSC.
- Send out direct mail (all language must be worked out with the CPSC Compliance staff). This could include identifying customers who have the product in advance of the public notice and mailing them a notice of recall. Place this heading in red letters on the notice and on the outside of the envelope: "Important Safety Message" or "Safety Recall." If possible, notify consumers through e-mail.Set up a toll free number (the CPSC must review all scripts before implementation).
- Produce and distribute a video news release (the CPSC must review and approve script, with language that follows the agreed-upon press release language).
- Take out paid advertising that reaches a general or targeted audience (the CPSC must review and approve text). Include pertinent information related to recall. Place in newspapers, magazines, trade papers, etc.
- Provide pediatrician office or specialty posters (CPSC must review/approve text).Provide in-store recall posters (the CPSC must review/approve text). Include pertinent information related to recall. Make it big, bold and in color. Include photo or graphic of product hazard. Consider tear-off sheets with toll-free number and website address. Must be in stores before joint press release is issued. Print on poster a "display to date" for store clerks (minimum 120 days).
- Maintain a website, which includes a link to the joint press release and interactive registration of the recalled product for remedy.Provide other notification and incentives. Examples include placing recall information in product inserts, credit card statements or with accessory products. Send direct mail notice to customers whose names are known through customer service inquiries, catalogs, parts orders, warranty cards or product registration.
- Provide in-home repair by an authorized dealer or supply a pre-paid mailer for return of recalled products.
"Consumers no longer view product recalls in a negative light. Millions of products have been recalled ... How well a company conducts a timely, reasonable recall of a product can have a strong influence on consumers' attitude about the firm. Successful product recalls in the past have rewarded companies with continuing consumer support and demand for the firms' products." -- The Consumer Product Safety Commission