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$4.65 Million Penalty, Compliance Program Requirement for Product Safety Violations

Friday, April 14, 2017
Sandler, Travis & Rosenberg Trade Report

The Consumer Product Safety Commission has provisionally accepted an agreement assessing a $4.65 million civil penalty to resolve charges that a company knowingly failed to notify the CPSC of defects in its gas ranges. Any interested person may ask the CPSC not to accept this agreement or otherwise comment on its contents by May 1.

According to the CPSC, the company received more than 150 incident reports over a six-year period that these ranges could turn on spontaneously and could not be turned off using the control knobs. The company responded by developing a repair but did not notify the CPSC until later. On the other hand, the CPSC notes that since its acquisition by another firm this company has significantly increased its focus on consumer safety, including by implementing a robust product safety compliance program.

Under the settlement agreement the company will have to maintain a compliance program with respect to any consumer product it imports, manufactures, distributes, or sells that includes the following elements.

- written standards, policies, and procedures, including those designed to ensure that information that may relate to or impact Consumer Product Safety Act compliance is conveyed effectively to personnel responsible for compliance, whether or not an injury is referenced

- a mechanism for confidential employee reporting of compliance-related questions or concerns to either a compliance officer or another senior manager with authority to act as necessary

- effective communication of company compliance-related policies and procedures to all applicable employees through training programs or otherwise

- senior management responsibility for, and general board oversight of, CPSA compliance

- retention of all CPSA compliance-related records for at least five years and availability of such records to staff upon request

- a written standard, policy, or procedure designed to ensure that the company will seek to include a provision in any private protective order or settlement that specifically allows for disclosure of relevant consumer product safety information to the CPSC and other applicable authorities

In addition, the company will be required to maintain and enforce a system of internal controls and procedures designed to ensure the following with respect to all consumer products it imports, manufactures, distributes, or sells.

- information required to be disclosed to the CPSC is recorded, processed, and reported in accordance with applicable law

- all reporting to the CPSC is timely, truthful, complete, and accurate and in accordance with applicable law

- prompt disclosure is made to company management of any significant deficiencies or material weaknesses in the design or operation of such internal controls that are reasonably likely to affect adversely, in any material respect, the company’s ability to record, process, and report to the CPSC in accordance with applicable law

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