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This chapter contains information to familiarize companies with their reporting obligations under the Consumer Product Safety Act (CPSA). Companies that distribute consumer products subject to the provisions of the Federal Hazardous Substances Act (FHSA), Flammable Fabrics Act (FFA), Poison Prevention Packaging Act (PPPA), and Refrigerator Safety Act (RSA) also must comply with these reporting requirements.

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This chapter contains information to familiarize companies with their reporting obligations under the Consumer Product Safety Act (CPSA). Companies that distribute consumer products subject to the provisions of the Federal Hazardous Substances Act (FHSA), Flammable Fabrics Act (FFA), Poison Prevention Packaging Act (PPPA), and Refrigerator Safety Act (RSA) also must comply with these reporting requirements. The information which follows will help you to recognize potentially hazardous consumer products at an early stage, and will assist you in understanding when you are legally obligated to report information about the product to the Commission.

The information contained in this Handbook does not replace the Commission Statutes or Commission Interpretative Regulations set forth in 16 C.F.R. parts 1115 and 1116. For more information about reporting, see also the Commission's Statement of Enforcement Policy, 51 FR 23410 (1986) which may be obtained from the Regional Office.

STATUTORY REQUIREMENTS

Reporting Under Section 15 of the CPSA

Section 15(b) of the CPSA defines responsibilities of manufacturers, importers, distributors and retailers of consumer products. Each is required to notify the Commission if it obtains information which reasonably supports the conclusion that a product -

(1) fails to comply with a consumer product safety standard or banning regulation established by the Commission or a voluntary consumer product safety standard upon which the Commission has relied under section 9 of the CPSA;

(2) contains a defect which could create a substantial product hazard described in section 15(a)(2) of the CPSA; or

(3) creates an unreasonable risk of serious injury or death.

The Commission's interpretative regulation (16 C.F.R. part 1115, as amended following the enactment of the Consumer Product Safety Improvement Act of 1990) explains the company's obligations and those of the Commission. A copy of the regulations is included with the LOA or will be provided by the Regional Office upon request.

Reporting Products Involved in Lawsuits

In addition to the amendments to section 15 of the CPSA, a new section 37 reporting requirement has been added to the CPSA. This new section requires manufacturers (including importers) of a consumer product to report to the Commission if (1) a particular model of a consumer product is the subject of at least three civil actions that have been filed in Federal or State court, (2) each suit alleges the involvement of that model in death or grievous bodily injury (as defined in section 37(e)(1)), and (3) at least three of the actions result in a final settle- ment involving the manufacturer or in a judgment for the plaintiff within any one of the two year periods specified in section 37(b). The first two year period began to run on January 1, 1991 and ends on December 31, 1992. The second two year period starts on January 1, 1993; the third, on January 1, 1995; and so forth. Manufacturers must file a report within 30 days after the settlement or judgment in the third civil action to which the section 37 reporting requirement applies.

WHY REPORTING IS REQUIRED

The intent of Congress in enacting section 15(b) and section 37 of the CPSA was to encourage widespread reporting of potential product hazards. Congress sought not only to have the Commission uncover substantial product hazards, but also to identify risks of injury which the Commission could attempt to prevent through its own efforts, such as information and education programs, safety labeling, and adoption of product safety standards.

Although CPSC relies on sources other than company reports to identify substantial product hazards, reporting by companies under section 15 and section 37 provisions is invaluable because firms often learn of product safety problems long before the Commission does. For this reason, any company involved in the manufacture, importation, distribution or sale of consumer products should develop a system of reviewing and maintaining consumer complaints, inquiries, product liability suits and comments on the products they handle.

If a firm reports to the Commission under section 15 of the CPSA, it does not necessarily mean there is a substantial product hazard. Section 15 simply requires firms to report whenever a product (1) fails to comply with a consumer product safety rule; (2) fails to comply with a voluntary standard upon which the Commission has relied; (3) contains a defect that could create a substantial product hazard; or (4) creates an unreasonable risk of serious injury or death. Thus, a product need not actually create a substantial product hazard to trigger the reporting requirement.

WHEN TO REPORT

It is the Commission's view that a firm should take that all important first step of notifying the Commission when the information available to the company reasonably indicates that a report is required. It is in the company's interest to assign the responsibility of reporting to someone in executive authority. The individual's knowledge of the product and the reporting requirements of section 15 and section 37 are valid reasons for assigning the responsibility.

REPORTING PROCEDURES

A company is considered to have knowledge of product safety information when such information is received by an employee or official of the firm who may reasonably be expected to be capable of appreciating the significance of that information. Under ordinary circumstances, five (5) days is the maximum reasonable time for that information to reach the chief executive officer or other official assigned responsibility for complying with the reporting requirements. Weekends and holidays are not counted in that timetable.

The Commission will evaluate whether or when a firm should have reported. This evaluation will be based, in part, on what a reasonable person, acting under the circumstances, knows about the hazard posed by the product. Thus, a firm shall be deemed to know what it would have known if it had exercised due care ascertaining the accuracy of complaints or other representation.

If the company is uncertain whether the information is reportable, the firm may elect to spend a reasonable time investigating the matter, but no evaluation should exceed ten (10) days unless the firm can demonstrate that a longer timetable for the investigation is reasonable. If a firm elects to conduct an investigation to decide whether it has reportable information, the Commission will deem that, at the end of ten (10) days, the firm has received and considered all information which would have been available to it had a reasonable, expeditious, and diligent investigation been undertaken.

PENALTIES FOR FAILURE TO REPORT

Failure to report in accordance with the above referenced requirement is a prohibited act under section 19(a) of the CPSA which states: It shall be unlawful for any person to - (4) fail to furnish information required by section 15(b); (11) fail to furnish information required by section 37.

Any person who commits a prohibited act is subject to civil penalties under section 20 of the CPSA, including fines up to $1.25 million for a related series of violations, and criminal penalties under section 21 of the CPSA, which includes fines up to $500,000 or imprisonment not more than one year, or both. Chapter 1 of this Handbook provides additional details regarding the penalties.
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excerpted from the REGULATED PRODUCTS HANDBOOK
U.S. Consumer Product Safety Commission, Office of Compliance
February 1994 - 2nd Edition*

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