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Apr
30

Buyer (and Seller) Beware of Recalled Items

Most consumers are aware that it’s illegal for retailers to sell products that have been recalled—the large fines resulting from these violations, often totaling millions of dollars, tend to receive a fair amount of media coverage. After all, intuitively it makes sense that retailers would be responsible for ensuring that their customers don’t go home with potentially dangerous or hazardous products. However, this doesn’t address the massive resale market, which includes thrift stores, consignment stores, charities and any individual who sells used items at a yard sale or flea market. Thanks to a 2008 law, the liability for selling a recalled product now extends well beyond the big box retail brands we all know so well. Now anybody who sells a recalled item, whether they’re aware of the recall or not, is liable for any injury or harm caused by the item. Awareness is half the battle, and thankfully the U.S. Consumer Product Safety Commission offers a number of resources to help resellers avoid reintroducing a recalled item into the market.

Headline-grabbing fines for retailers who sell recalled items are fairly common. For example, a major home improvement retailer was fined $5.7 million in 2017 for selling nearly 3,000 items that had been impacted by 33 different recalls. Similarly, a multinational consumer electronics retailer was fined $3.8 million in 2016 for selling hundreds of units of 16 recalled products. These fines are meant to send a message to other retailers in an effort to decrease the number of recalled items that make it into the hands of consumers, but there are a number of reasons why these violations happen in the first place.

One key challenge faced by big box retailers is that products are constantly being returned to their stores. These returns happen for a number of reasons and only some of the returns are prompted by a malfunctioning or potentially dangerous product. With such a high volume of returns, it can be difficult to consistently track whether an item has been returned because it is unsafe or because the customer simply didn’t want it, and recalled items can be unintentionally re-stocked. It’s also possible that customer service employees and cashiers may sometimes be overriding prohibited sales of recalled items or simply unaware of the recall in the first place. Regardless, under the Consumer Product Safety Act, retailers bear the responsibility for making sure the products they sell are safe, and for paying any penalty that results from failing to meet that responsibility. Thankfully, many of the large retailers who have made headlines in recent years for selling recalled products have all agreed to deploy more sophisticated procedures to track these items and prevent future unlawful sales.

Under the Consumer Product Safety Act, which was enacted in 1972, federal law didn’t restrict recalled products from being sold or resold, meaning that potentially dangerous items were entering consumer’s homes from both the primary and secondary (resale) markets. A recent major change occurred in 2008 with the passage of the Consumer Product Safety Improvement Act (CPSIA). Under this law, it is now illegal for anybodyto sell a recalled product—whether you are a major retail chain with hundreds of stores, or a private citizen selling from a booth at a flea market or garage sale. As Consumer Reports notes, “In the event that someone is injured by a recalled product you sold and pursues a civil or even a criminal action against you, you could be held responsible and have to pay damages or face other penalties.” Whether or not the seller is aware of a particular recall doesn’t actually matter—if you sold it, you are technically liable for any harm done to the purchaser by the product. As the CPSC explained, “If you are in the business of reselling products, you are expected to know the laws, rules and regulations that apply to your business, including whether or not a product you are selling has been recalled for a safety issue.” It’s up to resellers to research the products they’re offering to look for any recalls or ongoing safety issues. Additionally, items geared toward babies and small children, safety items like helmets and kitchen items like blenders are considered high-risk and resellers are generally advised to avoid them. According to the law, fines for selling recalled items can reach anywhere from $100,000 to a maximum of $15 million.

Thankfully, there are a number of resources available to help resellers limit their risk of being sued for selling a recalled item. The best resource is the Consumer Product Safety Commission’s Recall Database at cpsc.gov. On the Recalls section of the site, visitors can run a simple search by product type or full product name to verify whether or not a particular item is subject to a recall. The site offers information on the particular safety concern that prompted the recall, as well as details on how to report the recalled item. The CPSC offers another useful tool in the form of their Resellers Guide to Selling Safer Products. This document includes a list of resources for resellers, a list of items that cannot be sold under the new CPSIA law and a product guide that details typical safety issues with commonly resold products such as baby and children’s items, car seats and household appliances.

As the government looks to increase its ability to prevent products from causing harm to consumers, it’s important to remember that liability for selling recalled items extends beyond large retailers. While it’s unlikely that the CPSC will pursue individuals who violate the CPSIA in the same way that they pursue big box retailers, or that the resulting legal action will generate the same level of media coverage, the fact remains that at the end of the day every reseller is technically liable for any harm caused by a recalled item they sell. Luckily, online tools are making it easier for resellers to do their due diligence, but awareness is critical—if resellers don’t know they’re ultimately liable, they may not know to research the items they’re selling.

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