The Australian Competition & Consumer Commission (ACCC) has released a 57 page
report on its
Review of the Australian product safety recalls system.
The report follows the Productivity Commission's 2006 review of the Australian consumer product safety system, which
recommended that the ACCC conduct a "review of recall effectiveness pursuant to" comments in the 2006 review. The ACCC accordingly examined "the existing consumer product recalls system, the regulators involved in its oversight and the ways in which the risks associated with unsafe goods can be addressed by suppliers and regulators". Overall, "while the review did not reveal significant problems with the system, it has enabled the ACCC to consider a number of product recall processes and practices which may improve the effectiveness of the system". Yes, Sir Humphrey.
The report notes that over 10,000 products have been recalled in Australia during the past 23 years, with 'general consumer product recalls' (eg non-pharmaceutical products) being the responsibility of the ACCC and representing 25% of all safety recalls. The average return rate of recalled goods is 56.75%. (The ACCC notes that return rates vary from 80% to 36% depending on types of goods overseen by the different Commonwealth regulators and reflecting factors such as the communication methods used, hazard posed and level of intervention by regulators.)
Unsurprisingly, the ACCC reports that some regulators encourage industry to voluntarily address unsafe products and only intervene in the recall process if industry fails to "adequately mitigate the risks"; other regulators were "more involved and actively managed the process from the outset". The 'light touch regulation' is of concern, given the ACCC's acknowledgement that "recall was more effective when the regulator actively managed and had a greater level of involvement in all aspects of the recall process".
Four broad aspects of the recall regime were identified by the ACCC: notification of the product recall to the relevant regulator/s, communication of the recall to consumers, retrieval of the recalled product and closure of the recall.
In discussing the notification element the ACCC comments that when a supplier decides to recall an unsafe product from within the supply chain or from consumers, the supplier has a statutory obligation to notify the relevant government minister or commissioner (ie at the Commonwealth and state/territory level) where the product is supplied. For consumer products generally that notification must be made to the Commonwealth Minister via the ACCC. Specialist Commonwealth product safety regulators also require notification regarding recall of particular products such as motor vehicles, food products and animal medicines. The ACCC concludes that "the multiplicity of notification requirements may be a burden on suppliers that could delay recall initiation" and suggests that "there are opportunities to better align and clarify the different notification requirements of Commonwealth product safety regulators", with the ACCC of course undertaking to "work with other Commonwealth regulators to facilitate the alignment of notification requirements".
It notes the absence of a definition of what constitutes a recall, a problem in reklation to ensuring compliance with statutory notification provisions. 'Recall' for example is not defined in the
Trade Practices Act 1974 (Cth) or "any other legislative instrument in relation to product safety", with "some suppliers" being seen to "take a narrow view and thereby avoid the statutory notification provisions". The ACCC will belatedly "amend the Recall Guidelines to clarify that suppliers should notify the Commonwealth minister of all actions taken to address the risk posed by an unsafe product, including the issuing of a safety alert, the recall of a product from consumers, and the recall of a product from within the supply chain". Marvellous what a change of government will do.
Statutory notification provisions currently require suppliers to advise international recipients of products being recalled but do not require notification of others in the domestic supply chain, which results in "inconsistent protection of Australian consumers". The ACCC indicates that it will address the deficiency by revising the Recall Guidelines.
The ACCC examined how recalls are currently communicated to consumers and whether that "corresponds with the communication preferences of different consumer demographics". It found that the use of newspapers alone to advertise recall notices is "in many cases no longer sufficient", with "communication channels allowing direct contact between the supplier and consumers [being] the most effective methods of communicating product recalls". Those channels are glossed as including "new internet phenomena like Facebook and Twitter to advertise recalls, responding to the growing popularity among some consumer demographics of blogs and social networking sites".
There are no great surprises in the statement that "recall notices should also be easily recognisable and easily understood, capturing consumers' attention and motivating them to bring the product back as soon as possible". That conclusion reflects a recognition that "the wording, tone and design of a recall notice can create barriers to consumer compliance by providing too little information or too much complex information, and can allow consumers to talk themselves out of complying". Solution? "The ACCC will revise the Recall Guidelines to clarify the requirements".
It will also encourage suppliers to "have systems in place to track products and retain records that reflect the movement of products through the supply chain" and will "encourage other mechanisms to ensure that consumers are made aware of product recalls, such as warranty cards and online registration facilities". That aspiration - one might ask how much encouragement is needed and the enthusiasm with which the ACCC will approach its task - is reflected in the statement that
The Recalls Australia website, which details product recalls occurring around Australia, is an invaluable reference tool for consumers. Currently, over 15 000 suppliers and consumers are receiving emails and RSS feeds about the latest product recalls. The ACCC will continue to actively promote the website.
Cheers and congratulation all around.
The ACCC found that supplier success in retrieving unsafe products is
influenced by the level of oversight product safety regulators have of the recall. Active monitoring and oversight of the recall usually involves the regulator requiring regular progress reports from suppliers and using these to assess the effectiveness of the recall and to identify how recall return rates could be improved. Reporting also assures the regulator that the supplier has addressed the remedial aspects of a recall by identifying the cause of the product defect and taking steps to ensure that further unsafe products do not enter the market. This includes providing evidence of the rectification or destruction of unsafe goods prior to recall closure. By providing additional guidance to suppliers on reporting requirements, the ACCC will ensure that each recall has a better chance of success.
The ACCC will - again, no surprises - address that statement by revising the Recall Guidelines, with reporting requirements to "be agreed on a case by case basis" and "tailored to ensure that high-risk recalls are more closely monitored and necessary additional measures are identified in a timely fashion".
Laura Heymann's 'Reading the Product: Warnings, Disclaimers, and Literary Theory' in 22
Yale Journal of Law & the Humanities (2010) 393-415 meanwhile
comments that
The conventional wisdom among some scholars and courts seems to be that product warnings and disclaimers are ineffective – that even if problems with font, location, and other visual elements are resolved, consumers are unable to process these messages. Behavioral economists explain this difficulty by cataloging the various ways in which consumers fail to appreciate risk: cognitive biases, willful ignorance, or the overwhelming appeal of advertising. And yet, the law hasn't abandoned reliance on warnings or disclaimers. Product liability law not only encourages their presence but (in a failure-to-warn case) expects consumers to read and understand them. Courts in trademark infringement cases will, on occasion, order a disclaimer when they feel that important speech-related interests are at stake. And the Supreme Court has suggested the use of disclaimers in several First Amendment-related (albeit not product-related) cases. This conflicted approach is a bit puzzling: If these messages are truly useless, then we might expect courts to abandon reliance on them as any sort of an effective remedy or as considerations in whether the defendant has acted reasonably. The fact that courts haven't done so suggests that courts do not believe that such messages are useless. If that is the case, perhaps we should find ways to increase the chances that such messages are presented effectively, rather than having our initial response be one of skepticism and doubt.
