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First-Ever Criminal Prosecution for Failure to Report Product Safety Issues

Friday, April 05, 2019
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that two corporate executives have been indicted in the first-ever criminal prosecution for failure to furnish information under the Consumer Product Safety Act.

The CPSA requires importers, manufacturers, and distributors of consumer products to report immediately to the Consumer Product Safety Commission information that reasonably supports the conclusion that a product contains a defect that could create a substantial product hazard or creates an unreasonable risk of serious injury or death. This duty applies to the individual directors, officers, and agents of such companies as well.

According to a DOJ press release, the individuals at issue were part-owners and chief administrative or executive officers of two corporations that imported, distributed, and sold to retailers for consumer purchase items made in China. The indictment alleges that these individuals violated the CPSA as follows.

- received multiple reports that the items were defective and dangerous and could catch fire but knowingly failed to disclose the defects to the CPSC for at least six months

- deliberately withheld information about these items from the retail companies that bought them, the insurance companies that paid for damage caused by the fires they caused, and the CPSC

- continued to sell the items to retailers with false certifications that they met safety standards

- caused a company employee to solicit materials that would falsely portray to an insurance company that the items were safe and not defective

- sent an untimely report to the CPSC falsely stating that the items were not defective or hazardous

For more information on product safety rules and regulations and ensuring your company is in compliance, please contact Beth Ring at (212) 549-0133 or Ned Steiner at (202) 730-4970.

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