Category: Automotive Industry

Fake product recalls – unlike other claims of so-called “fake news” – are exceedingly rare. But they are not without precedence. Just last year, a car dealership in Washington, D.C., was heavily fined by the Federal Trade Commission for sending fake recall warnings to car owners in the hopes of drumming up more business for the dealership’s repair shop. The dealership sent out bright red mailers that mimicked official recall notices from the National Highway Traffic Safety Administration (NHTSA).

PA swift and thorough product recall is the best way to mitigate any legal liability risk from a defective product, removing inventory from the market before problems become pervasive. But in many cases, product defects or dangers aren’t discovered until after harm has occurred and liability cannot be avoided. Product liability laws enable consumers to sue those parties responsible when a product causes property damage, injury or death.

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.

When a consumer’s smartphone spontaneously combusts, the word-of-mouth news spreads to millions within days if not hours. If a certain blood pressure medicine is contaminated with a potentially cancer-causing agent, it could take months before routine testing uncovers the defect, and weeks more before the news and notifications slowly trickle.

Sleeplessness is a common malady of business leaders whose companies have had to undergo a product recall. When a recall hits home, how well a company prepares for and manages the recall requirements can mean the difference between preserving customer loyalty and severely damaging the brand reputation, or even worse…sink a business entirely. Anxiety levels spike throughout the company as leaders brace for bad publicity, lower earnings, lost market share, legal liability, or a host of other unwanted outcomes.