Recalls by Manufacturers

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Recalls by Manufacturers

Sections Within This Essay:

Background
Consumer Product Recalls
Food, Drug, and Cosmetics Recalls
Meat, Poultry, and Egg Safety
Automobile Recalls
Lemon Laws
Additional Resources
Organizations
American Bar Association
Consumer Reports
U.S. Department of Agriculture (USDA)
U.S. Food and Drug Administration (FDA)
National Highway Transportation Safety Administration (NHTSA)
Federal Consumer Information Center (FCIC)
U.S. Consumer Product Safety Commission (CPSC)

Background

Sometimes certain defects in a product become apparent after the product has entered the marketplace and been sold. These defects can be related to safety, such as when a certain model of automobile has problems with its braking system, where small pieces from a toy pose a choking hazard to young children, or where a medication poses a previously undiscovered, serious adverse health risk to users. Sometimes the problem is another kind of defect, as when a certain model of vacuum cleaner consistently fails to work properly. A recall may be necessary to remedy problems with a product. Recalls are procedures taken by a manufacturer to remove a product from the market. Recalls allow a manufacturer the opportunity to repair or replace the defective product. Recalls can be costly procedures for manufacturers, but are often less costly than multiple lawsuits or the loss of goodwill among consumers. Recalls may be voluntary on the part of a manufacturer, or they may be mandated by the government.

Six agencies within the U.S. government have jurisdiction over recalls:

The Consumer Product Safety Commission (CPSC) has jurisdiction over thousands of products used in homes, schools, and for sports and recreation
The Food and Drug Administration (FDA) has oversight over food, drugs, medical devices, animal feed, cosmetics, and radiation-emitting products such as lasers, micro-waves, and cell phones
The Food Safety and Inspection Service (FSIS) of the Department of Agriculture (USDA) inspects and regulates meat, poultry products, and eggs and egg products
The National Highway Traffic Safety Administration (NHTSA) is responsible for recalls of motor vehicles and related equipment, child safety seats, and tires
The Coast Guard covers recreational boats and related equipment
The Environmental Protection Agency (EPA) has recall jurisdiction over insecticides, rodenticides, fungicides, and vehicle emission testing

Consumer Product Recalls

Manufacturers recall many of their own products every year when defects and/or safety risks are discovered in their products. Most recalls occur for safety-related reasons. Sometimes, a manufacturer will voluntarily recall products, and sometimes they are compelled to issue recalls.

The Consumer Product Safety Commission has jurisdiction over more than 15,000 consumer products. According to the agency, deaths, injury, and property damage from consumer product incidents costs the U.S. more than $700 billion a year. CPSC contends that its advocacy since 1972 has resulted in a 30 percent reduction in death and injury from consumer products. CPSC announces recalls of products that present risks to consumers because the products are either defective or violate mandatory safety standards issued by CPSC.

When a consumer discovers that a product that she owns is recalled, she should stop using it. The consumer should also follow the specific guidance in CPSC's recall announcement on that product. A product recall usually lasts indefinitely. Even if more than a year has passed since CPSC issued a recall notice, product owners should read and follow the instructions in the recall notice.

The remedies for recalled products are specific to each product; no single remedy applies to all products. Each recall announcement is as specific as possible and details the remedy for the product. An announcement typically includes information on where the product was sold, the type and number of injuries or damage caused by the product, and contact information needed to obtain the remedy. The announcement frequently limits recalls to products manufactured during a specific time period. For example, CPSC may announce a recall on toy X, manufactured between June 17, 2005 and August 23, 2006. Owners may or may not get a refund of their recalled product.

Food, Drug, and Cosmetics Recalls

The Food and Drug Administration is charged with overseeing the safety and effectiveness of food, drugs, and many cosmetics products. As with other consumer goods and motor vehicles, recalls may be necessary when it is determined that a consumable product may pose considerable risk of harm to individuals. In terms of food, drugs, or cosmetics, recalls may proceed under a manufacturer's own initiative, by FDA request, or by FDA order. There are three classes of recalls in descending order of urgency:

Class I recalls are cases in which there is a reasonable chance that the use of or exposure to a product will cause serious adverse health consequences or even death.
Class II recalls are cases in which exposure to a product may cause temporary or reversible adverse health consequences, or where the odds of serious adverse health consequences are not great.
Class III recalls are situations in which use of or exposure to a product is unlikely to cause adverse health consequences.

Examples of Class I recalls are foods found to contain botulinal toxin, foods with undeclared allergens, or mislabeling a life-saving drug. A drug that is under-strength but not used to treat life-threatening situations is one example of a Class II recall; another is where two units of blood are collected from a donor who has traveled to a country where malaria is endemic. Class III recalls might include container defects such as a lid that does not seal, a product that is off-taste or color, or a retail food that does not have a label in English.

Recalls may happen in three ways. First, a manufacturer or distributor may decide on its own initiative to issue a recall to remove a product from the market. Second, FDA may request a recall. Finally, two things can happen in the rare instances where a firm does not comply with FDA request. In certain circumstances the FDA has statutory authority to order a recall; in other cases the FDA must seek legal action under the Food, Drug, and Cosmetic Act. The FDA can prescribe a recall only when a medical device, human tissue products, or infant formula pose a risk to human health. Legal remedies available to FDA include seizure of the available product, an injunction against the manufacturer, and/or a court request for recall of the product.

A market withdrawal is a less drastic step than a recall. A market withdrawal is voluntary on the part of a manufacturer, and occurs when a product has a minor violation that would not otherwise be subject to FDA legal action. In these cases, a firm will remove its product from the market or otherwise correct the problem. For example, a product will be removed from the market if there is evidence that its packaging has been compromised. This can happen without any manufacturing or distribution problems.

A medical device safety alert is issued in situations involving a medical device that presents an unreasonable risk of substantial harm. These are primarily intended to inform potential users of possible hazards. In some cases, these alerts also are considered recalls.

Meat, Poultry, and Egg Safety

The Department of Agriculture's Food Safety and Inspection Service is responsible for meat, egg products, and poultry products inspections. The Federal Meat Inspection Act provides FSIS with inspection duties for meat products sold in interstate commerce. FSIS also reinspects imported meat products to ensure they meet U.S. food safety standards. The Poultry Products Inspection Act and the Egg Products Inspection Act provides similar jurisdiction over those products. For example, in an egg processing plant, an inspector would examine eggs before and after breaking, that are intended for further processing and for use as food. FSIS works with manufacturers and distributors to uncover problems, set the parameters for recall, and monitor its implementation.

Automobile Recalls

The Department of Transportation's National Highway Traffic Safety Administration (NHTSA) is the federal agency authorized to issue vehicle safety standards and to require manufacturers to recall vehicles with safety-related defects (49 USC §301). Since NHTSA's inception in 1966, more than 299 million vehicles of all types, 43 million tires, and 84 million pieces of motor vehicle equipment (including child seats) have been recalled to correct safety defects. Vehicle manufacturers initiated some of these recalls. Others have come about after NHTSA investigation or through court action, instigated by the agency.

A safety defect is defined as a problem with a motor vehicle or motor vehicle equipment that poses a risk to motor vehicle safety. Moreover, it must be common to a group of vehicles of the same manufacture or design, or to items of equipment of the same type and manufacture. If a manufacturer identifies a safety defect, the manufacturer notifies NHTSA, as well as vehicle or equipment owners, dealers, and distributors. The manufacturer must then fix the problem, typically without charge to vehicle owners. NHTSA assesses the adequacy of the manufacturers' corrective action and makes sure manufacturers comply with all statutory requirements.

Vehicle owners should report possible auto safety issues to NHTSA. The combined effect of a number of similar complaints can trigger an investigation into the alleged safety defect and ultimately lead to a recall. However, there is no set number of complaints an agency must receive before launching an investigation; NHTSA reviews every report of an alleged safety issue. A report to NHTSA can be made three ways: through the agency's toll-free telephone hotline, by mail, or via the Internet. Consumers are asked to supply specific information necessary for NHTSA staff to evaluate the problem. The information is entered into NHTSA's database and a copy is forwarded to agency staff for evaluation. The agency assesses the information individually, as well as in combination with other information in its database. The information is organized according to vehicle make, model, model year, manufacturer, and the affected part, assembly or system. NHTSA staff monitor such complaints to determine whether a pattern emerges that may indicate potential safety-related problems on any specific vehicle, tires, or equipment.

The Office of Defects Investigation (ODI) within NHTSA is responsible for investigating potential safety defects. The investigative process consists of four parts:

Screening. ODI determines whether to open an investigation. During this phase, ODI will conduct a preliminary review of consumer complaints and other information related to the alleged defect.
Petition Analysis. ODI processes petitions for defect investigations during petition analysis.
Investigation. ODI conducts an investigation of the alleged defect(s).
Recall Management. Assuming the investigation leads to a recall, ODI will monitor the overall adequacy of safety recalls and the safety-relatedness of service bulletins.

In most cases, manufacturers discover safety defects through their own testing procedures, and make voluntary recalls to remedy the defects without NHTSA involvement. Federal law requires manufacturers to report the findings that safety defects exist in their product, and to take appropriate action to fix the defects. As some vehicles age, however, certain design and performance problems may occur. These problems often lead to complaints to NHTSA by vehicle owners. These consumer complaints can form the basis for a defect investigation, possibly leading to a recall.

After the NHTSA determines a safety defect or other noncompliance issue exists, manufacturers are given a reasonable time to notify, by first-class mail, all registered owners and purchasers of the affected vehicles. (State motor vehicle offices provide the names of vehicle owners.) Manufacturers must inform vehicle owners of the safety problem and provide an evaluation of its risk to the vehicle's safety. The letter must also instruct consumers on the following details:

How to get the problem corrected
That corrections are to be made at no charge
When the remedy will be available
How long the remedy will take to perform
Who to contact if there are difficulties in obtaining the free recall work

Once NHTSA has made a defect determination, the manufacturer has three options to correct the defect: repair, replace, or refund the product. The circumstances of the defect and the overall cost of remedying the problem will determine the manufacturer's course of action. In the case of tires and equipment, the manufacturer can either repair or replace, but need not refund the tires or equipment. If a vehicle owner makes repairs before a recall is announced, manufacturers typically must still provide reimbursement to owners for costs incurred to remedy the defect.

A consumer's right to take advantage of a recall is limited by the age of the vehicle. In order to be eligible for free repairs, refund, or replacement, the vehicle must be less than 10 years old on the date the defect or noncompliance is determined. The age of the vehicle is based on the date it was sold to the first purchaser.

If a manufacturer challenges NHTSA's recall in court; the manufacturer is not required to perform any repairs while the case is pending. Owners who take a vehicle in for repairs after NHTSA's decision to order a recall, but before the case is finally decided, will not be reimbursed if the court finds in favor of the manufacturer. If the court rules against the manufacturer, owners may be entitled to reimbursement upon proof that the repairs were made.

Recall remedies do not foreclose other legal remedies; recalls are an additional layer of consumer protection. Persons who have been injured due to a safety-related defect may still bring suit against the manufacturer.

Lemon Laws

Lemon laws, found in every state, provide another layer of protection for vehicle owners. Lemon Laws entitle aggrieved consumers to a replacement vehicle, or a full refund, where the vehicle is so defective that the dealer cannot satisfactorily repair it. Before a lemon law can be invoked, the dealer must be given a reasonable opportunity to repair the defect.

Lemon laws usually apply to purchases or leases of new cars, trucks, motorcycles or motor homes. Additionally, lemon laws cover "demonstrator" or "executive" vehicles that are less than a year old and still under original warranties. Generally, the laws do not apply to purchases of mopeds or trailers.

Lemon laws vary from state to state. Basically, a mechanical defect must be one which substantially impairs the use, value, or safety of a vehicle. Lemon laws usually have time or mileage limits. A defect must be presented to the manufacturer or authorized dealer within these limits in order to be covered under the lemon law.

Once notified of a problem with a vehicle, the manufacturer must be allowed to repair the defect within a reasonable number of repair attempts. If the manufacturer cannot repair the defect in the vehicle within a reasonable number of repair attempts, the vehicle owner will be entitled to a refund or replacement. How many repair attempts constitutes a "reasonable number" varies from state-to-state, but a typical number is four repairs for the same problem within six months or a year. A lemon law may also be invoked where a vehicle with substantial defects is out of service for a certain number of days during a specified time period.

The nature of the defect also bears on the number of repair attempts permitted. If the defect could cause death or serious bodily injury, only one repair attempt will be allowed before the vehicle is presumed to be a lemon. If the defect is not so serious or potentially dangerous, then the manufacturer will be permitted additional repair attempts to correct the defect.

If an owner believes he has purchased a lemon, he should write the manufacturer and request a replacement vehicle or a refund. In some states the dealer must also be notified. Assuming the request is granted, the owner will not be allowed to keep the defective vehicle. If the defective vehicle is replaced, the manufacturer should refund repair costs and charge the owner nothing for mileage. If a refund is given instead of a replacement vehicle, the refund should include:

The entire purchase price
Any sales tax paid on the vehicle
Finance charges
The cost of repairs to the defective vehicle
A deduction for mileage

If a manufacturer refuses to give a refund or provide a replacement of a defective vehicle, an owner may be able to get relief by submitting her complaint to an arbitration forum. This is often quicker and less expensive than litigation. In some states, if the manufacturer of the vehicle has a state certified arbitration program, the owner must use it before suing the manufacturer in court for a refund or replacement vehicle.

In some cases, a court may need to decide if a vehicle is a lemon and what remedy to provide. If an owner prevails in a lawsuit against the manufacturer, some jurisdictions allow damages worth double the vehicle's purchase price and repair costs, in addition to other costs and attorney fees.

An owner needs to provide documentary evidence to demonstrate that a car is a lemon. This includes all records of any repairs done, including dates of service and descriptions of the exact repairs made. This information is particularly critical when the car is repaired at some place other than the dealership where the car was purchased. In addition to repair records, an owner should retain the purchase contract, any written warranties, and should note on a calendar when the vehicle is at a dealership or other shop for warranty repairs. If a vehicle is operable, it may be driven while the appropriate authorities determine whether it is a lemon. If the vehicle is indeed a lemon, the dealership is often allowed to deduct a certain amount for mileage from the refund.

In many states consumers who purchase a used car are also covered under the lemon laws. For example, an owner who has recently purchased a used car may be entitled to cancel the purchase and receive a refund, where the vehicle fails a safety inspection. Vehicle safety inspections are mandatory in most states. Generally, the safety inspection must occur within a certain period of time after the purchase of the car, and the repairs must exceed a stated percentage of the purchase price of the car. In some states, a vehicle that has passed its inspection may still qualify as a lemon. Moreover, some jurisdictions apply lemon laws to both dealers and private sellers.

Additional Resources

Consumer Product Safety Howells, Geraint G., Dartmouth Publishing Co., 1999.

Product Warnings, Defects, and Hazards, Second Edition. O'Reilly, James T., Aspen Publishers, Inc., 1998.

Safer by Design: A Guide to the Management and Law of Designing for Product Safety, Second Edition Abbott, Howard and Mark Tyler, Gower Publishing Co., 1997.

Safety Recall Compendium: A Guide for the Reporting, Notification, and Remedy of Motor Vehicle and Motor Vehicle Equipment in Accordance with Title 49 of the United States Code, Chapter 301 and Supporting Federal Regulations. NHTSA, 2001.