The Impact of Increasing Civil Penalties on Building Your Compliance Program

Black-and-Decker-mower1At the end of April, Black & Decker agreed to a sizable civil penalty for failing to report unsafe electric lawnmowers within the required 24 hours. http://www.cpsc.gov/en/Newsroom/News-Releases/2015/Black-and-Decker-Agrees-to-1575-Million-Dollar-Civil-Penalty-Internal-Compliance-Program-for-Failure-to-Report-Defective-Lawnmowers/

“Black & Decker’s persistent inability to follow these vital product safety reporting laws calls into question their commitment to the safety of their customers. They have a lot of work to do to earn back the public’s trust,” said CPSC Chairman Elliot F. Kaye. “Companies are required to report potential product hazards and risks to CPSC on a timely basis.  That means within 24 hours, not months or years as in Black & Decker’s case.”

According to the CPSC Press release, Black & Decker will make the following changes to their compliance program:

“In addition to paying the $1.575 million civil penalty, Black & Decker has agreed to maintain an internal compliance program to ensure that the firm complies with CPSC’s safety statutes and regulations and also agreed to a system of internal controls and procedures that includes:

  • written standards and policies;
  • confidential employee reporting of compliance concerns to a senior manager;
  • procedures for reviewing claims and reports for safety concerns and for implementing corrective and preventive actions when compliance deficiencies or violations are identified;
  • effective communication of compliance policies and procedures, including training;
  • senior management responsibility for, and general board oversight of compliance; and
  • requirements for record retention.”

Many businesses have insufficient processes and procedures in place to receive, maintain, and react to customer complaints, and as CPSC is showing on a more and more frequent basis, the consequences can be severe. Many small businesses are not in a position to hire a full time staffer to maintain these records, or check customer complaints on saferproducts.gov. Additionally, customer complaints must be investigated to find root causes and potentially rework the product, requiring work with third party labs and verification of changes at the factory, another element of ongoing compliance difficult for small firms to manage. Lastly, many firms have insufficient policies around records retention (7-10 years in many cases) which can lead to lost or damaged records and potential civil penalties, as Black & Decker has learned.

If this sounds like your business, go to Service Philosophy to learn more about how Cascadia Product Testing Solutions can help you avoid costly fines and unwanted quality time with regulatory agencies!

About the Author
Rachel Johnson Greer is a global business strategist who specializes in helping entrepreneurs increase their internet product sales, curate their brand image online and avoid catastrophic legal threats. After getting her MBA in international business at Seattle University, she spent nearly a decade at Amazon working in product development. Since then, Rachel has founded companies that reached both multi-six figure and multi-seven figure growth in under three years.

As a business coach, she supports clients in everything from international product expansion to 4x-ing their sales through online retailers. Rachel is frequently sought out by the media and has appeared on the Today Show, CNBC, Business Insider, The Wall Street Journal and Bloomberg. When she’s not working with clients, she’s scaring friends at parties with stories about the most problematic online products she’s found in their homes. She lives in Seattle, Washington.

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