The ACCC has recently published its “Review of the Australian product safety recalls system” (Review). The Review considers the current product recall system in Australia, and foreshadows significant changes to a number of processes and practices required to be undertaken by suppliers, including: notifying authorities; communicating with consumers; retrieving the product; and closure of the recall.
The ACCC considers that the current requirement to notify a number of State/Territory and various Commonwealth agencies of a recall may delay the initiation of a recall. Although the proposed Australian Consumer Law will streamline notification requirements, the ACCC intends to liaise with other Commonwealth regulators to further streamline these requirements.
The ACCC also proposes to clarify the meaning of “recall” in its “Product safety recall: a guide for suppliers” (Recall Guidelines), so that it is clear that suppliers should notify the relevant Commonwealth minister of actions taken to address risks posed by unsafe products, including issuing safety alerts and recalling products from consumers and from the supply chain.
The Review proposes further changes to the Recall Guidelines such as:
requiring suppliers to notify other parties in the domestic supply chain (and not just international recipients of the product as is currently requested) that a product has been recalled and both those in the domestic supply chain and international recipients are to be notified of all actions taken to address any risks posed by the recalled product;
providing more information to assist suppliers to develop recall policies and procedures; and
indicating that suppliers should notify the relevant Commonwealth minister of the actions taken to minimise risks after a product recall.
The ACCC is yet to make these changes to the Recall Guidelines. Recommendations in the Review will form the basis of consultations with stakeholders such as regulators and industry representatives.
The ACCC considers that a communication campaign based on ‘traditional’ formats such as newspaper notices is no longer sufficient to communicate a product recall to varying demographics. The Review states that the Recall Guidelines should be modified so as to require suppliers to use different communication methods, including, potentially, online forms of communication such as forums, blogs, websites and social networking sites. The ACCC has already established a Twitter account (@productsafetyAU) to communicate with the public regarding recalls.
The Recall Guidelines will be further modified so that every recall notice will have:
words in the title that will have the greatest impact on consumers;
a border in red;
a photo of the product and, where available, a hazard symbol;
a clear description of the product and risk posed;
a ‘what to do’ section that tells the consumer what steps to take; and
contact details for the supplier.
Importantly, the wording “voluntary recall” will no longer be permitted in recall notices, as the ACCC considers that this creates confusion amongst consumers.
The ACCC will encourage suppliers to have systems in place to track products (including tracking labels, warranty cards and online registration facilities), as well as amend the reporting requirements in the Recall Guidelines in order to increase the effectiveness of recalls. The ACCC has indicated the reporting requirements will be agreed between the ACCC and the supplier on a case by case basis.
The ACCC will also undertake further investigations over the next 12 months to consider whether it will be appropriate to make legislative amendments to allow the relevant Commonwealth minister to direct a supplier to offer a particular remedy when ordering a compulsory recall, and to make it an offence to supply goods subject to a voluntary recall.
The Review foreshadows amendments to the Recall Guidelines relating to closing a product recall. Suppliers will be required to provide:
information on the root cause of the product defect and the steps taken to remedy the defect;
evidence of the destruction or rectification of the product the subject of the recall; and
a final report, providing details on matters such as the number of products discovered to be affected; the communication strategy; and any known injuries or deaths associated with the product.
The ACCC intends to make number of significant changes to the way product recalls are notified, communicated and closed, and how recalled products are retrieved and tracked. These changes will mean increased compliance costs in amending your policies and procedures, and taking further measures to notify authorities, other suppliers and consumers of a product recall. Furthermore, if newer forms of online communication such as social networking sites are used to communicate a product recall, this may lead to increased reputational damage to suppliers if steps are not taken to rectify the risk posed by an unsafe product quickly.