Consumer Protection?

It has become a regular news story: Product recalls. Whether they are related to manufacturing defects due to design or from things like lead content in paint, it seems that there is a product recall every day. Product recalls have touched just about every aspect of our lives, from toothpaste to toys, from pet food to people food. No one seems to be “in charge” of consumer protection. There is an agency charged with the task, called the U.S. Consumer Protection Agency. It has within its charter a Consumer Products Safety Commission. Hmmm! I wonder what’s in their job description?

Authorization and Appropriation

As with any part of the government, the charter and the programs authorized are only as good as the funding. So there could be a thousand inspectors authorized, but if they only have a budget one inspector to monitor toys, then one inspector is all they’ll have. One inspector for toys is disappointing, but not really surprising.

Self-interest, Self-regulating

If you think about it, the logic would be that a company selling products to consumers would not want to sell a product like pet food that would poison pets. But it did happen, because the monitoring of the supply chain failed, whatever the reasons. You wouldn’t expect a toy manufacturer to skip a step in the product design process that is a simple as a “go/no go” check on the size of a product for a choking hazard for parts. (Go/no go means something as simple as having a measuring instrument; for example, something as simple as the paper tube out of a roll of toilet paper, so if a part can fit into it then it is “no go” because it would be a choking hazard.) You wouldn’t expect products of any kind to have lead paint if they are being sold into the U.S. market … but they are.

Obviously the risk/reward equation has been calculated and the “risk” has not outweighed the “reward” of having sufficient self monitoring in place inside these companies. So what’s a country to do?

Up the Risk

There will never be an ability to monitor and test 100% of the goods coming into the U.S. from foreign markets. Nor will the import of foreign products be stopped. Increased monitoring is important. Increased penalties are important for willing violations and for those companies that fail to take reasonable precautions and provide adequate oversight of supply chains and in setting quality control and design standards. Product engineering and testing must be sufficient to ensure consumer safety, and balanced with reasonable standards.

Here Comes the Congress: Senate Bill 2045 Consumer Product Safety Commission (CPSC) Reform Act of 2007

According to the press release on Senate Bill 2045 Consumer Product Safety Commission Reform Act of 2007, which was introduced by Senators Mark Pryor (D- Arkansas) and Daniel Inouye (D-Hawaii), Congress initiated an attempt to improve consumer safety by providing increased funding and enforcement authority and to strengthen consumer protection laws. The press release talking points include:

  • Increase 58 percent increase above current funding levels over the next seven years ($141,700,000)
  • Restore the CPSC to a five-member Commission
  • Increase staff to at least 500 employees by 2013
  • Streamline product safety rulemaking procedures
  • Require third-party certification of children’s products
  • Mandate tracking labels on children’s goods
  • Ban lead from children’s products
  • Foster information sharing among Federal, state, local, and foreign agencies
  • Ban the importation of recalled products
  • Enable the assessment of larger penalties
  • Enhance enforcement of CPSC statutes by increasing civil and criminal penalties
  • Allow state attorneys general to pursue civil actions
  • Provide whistleblower protection for manufacturers’ employees
  • Enhance recall effectiveness by banning the sale of recalled products
  • Require companies to identify their subcontractors in the supply chain
  • Require bonding of manufacturers to ensure funding for recalls
  • Enhance public access to product safety information
  • Enhance CPSC authority to order corrective action plans by the manufacturers of recalled products

Nord Says NO!

For most government agency heads, when budget increases are being handed out they say YES! But in this instance, the acting chairwoman of the Consumer Product Safety Commission, Nancy A. Nord has said “No” to the proposed legislation. She opposes the legislation on the following points, even though the legislation would more than double the agency’s budget and increase staff by 20 percent.

  • Increase the maximum penalties for safety violations, specifically the maximum penalty of $100 million
  • Make it easier for the government to make public reports of faulty products (She says she fears a flood of reports that will be frivolous and conceal true issues)
  • Prosecute executives of companies that willfully violate laws
  • Impose a 100% ban of lead in children’s toys (Nord maintains that it is impractical and unenforceable)
  • Protect industry whistle-blowers

Costly Impact on Business

There is no doubt that the increased regulations and compliance rules, especially the reporting and cost of bonding would increase the cost of doing business. But is it in higher than the lost of consumer confidence and trust currently being experienced? What will be the impact of the product recalls and the lost sales and during the next prime retail season (this Christmas)? As product recalls continue to occur, is a change in the government regulations and oversight agency going to restore consumer confidence, or just increase the cost of products and the cost of doing business?

Heart’s in the Right Place, But Make The Legislation Bark … and Bite!

The intent of the legislation is clearly there. But how effective and how quickly will it actually roll out and have a meaningful impact? From experience in manufacturing, quality assurance has to begin with the product design and process; inspection cannot be expected to catch 100% of the problems. Inspection is not the solution; improving the culture of responsibility and accountability all along the supply chain is. Sharing the risk and creating a penalty for failing to play by the rules is definitely part of the equation. Risk and reward is ultimately what everyone understands. Ultimately the consumers make the manufacturers understand through the power of spending. There certainly have to be bigger penalties for deliberate, willful, and knowing disregard for product safety. Getting the goods on companies that put the bottom line ahead of health and safety means enabling employees and other insiders to blow the whistle and then make it count. There have to be auditors, enforcement, and prosecution. Otherwise this legislation is meaningless. Like so many other rules, regulations, and agencies, it will end up being all bark, no bite.

I say go for it, Federal government, if you really mean it. Put teeth and money into the legislation. If you will put enforcement in, make it apply equally to your friends and your foes on both sides of the aisles, to all players and businesses. If you play, you follow the rules, with no exclusions, and no exceptions for any individual, business, or country. Welcome to a level playing field. Protect the U.S. Consumer. That is who you work for, after all.

(Note: This bill passed the Senate Commerce Committee on October 30, 2007 and never made it to the floor of either house for a vote in the 110th Congress.)

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