Sell a product? Risk a product recall
When you sell or manufacture a product it is not if but when you may experience a product recall. And product recalls are just not related to food. For British Columbians, the beginning of the Covid-19 pandemic tested our ability to adapt. We began washing our hands like surgeons. We became mindful of physical distancing around others. We learned how to make a face mask out of hair ties and a bandana. And for many of us, we added a new toiletry to our personal belongings: a bottle of hand sanitizer. Well, when we could get our hands on some hand sanitizer.
Purell, arguably the biggest maker of hand sanitizer in North America, was virtually impossible to find due to a perfect storm of events: huge demand, hoarding, price-gouging, and shortages on ingredients like pharmaceutical-grade ethanol. This left a massive hole in the market at an inopportune time. Retail and wholesale buyers had to work quickly to source new suppliers to fill the gap. Any kind of business that could re-purpose their operation to make hand sanitizer ramped up quickly to help meet public and health care industry demands. With all of this turbulence taking place in the hand sanitizer category, during a pandemic, in a short period of time, it’s not surprising that the wrong ingredients ended up inside many hand sanitizing products sold to consumers.
Massive recall of hand sanitizer
Since early June, hand sanitizer brand, after hand sanitizer brand has been added to Canada’s Recall and Safety Alert list. Currently, there are over 100 entries on the recall list for hand sanitizer. Many of these recalled products contained contaminants like industrial-grade ethanol or denaturants like ethyl acetate. Industrial-grade ethanol is not only harsher, it could also contain extra chemicals not meant to be applied to skin. Some of the sanitizer recalls also include “unauthorized to be sold in Canada” products, packaging missing “risk statements” on the label, or a combination thereof.
It’s not just food recalls that should put us on alert. Product recalls have become a regular occurrence in the marketplace. Walmart Canada even maintains a regularly updated product recall page on their website. A product recall may not happen in a dramatic fashion, complete with a pandemic, as the hand sanitizer recalls. But make no mistake, a product recall can be an extremely stressful event for any business. And if the business doesn’t have a product recall management strategy in place, it could easily turn into a nightmare.
Start selling a product, your business is at risk for product liability lawsuits
As a business owner, you’re responsible for every product you import, manufacture, distribute, or sell. Products can cause bodily injury to a customer. Products can cause property damage to a third party. A product recall can affect a company’s financial stability and brand reputation. If you’re selling a product, and you’re like most BC producers and manufacturers, then you are passionate about your products and will do everything you can to protect the public. The three most important steps you can take to protect your customers are:
1) Create a product liability risk management plan
Establishing a risk management plan that considers product safety and risk benefits over the life of the product can help reduce product liability claims and strengthen a businesses’ defense position in the event of litigation:
Develop a comprehensive quality control plan, safety, and a recall plan. Effective quality control reduces opportunities for mistakes that can lead to a product recall. As mentioned above, something as simple as a missing risk statement on a label puts customers in harm’s way.
Ensure all your suppliers, manufacturers and distributors carry the appropriate insurance and provide you with confirmation by means of a certificate of insurance. Make sure your business is added as an additional insured accordingly.
You can be directly held responsible for any products you import outside North America. Always verify that imported products comply with industry standards, government regulations and all labels contain the appropriate information.
Always work with legal counsel that specializes in Product Liability when drawing up contracts and includes all aspects of the lifecycle of the product.
Solicit customer feedback. This can aid in determining complaints, incidences, service, and warranty issues.
Effective documentation demonstrates to the courts the care you take in operating your business.
2) Protect your customers and business with product liability insurance
Product liability insurance protects your business against legal liability for claims for bodily injury or property damage arising out of those products. It’s designed to help protect your business by ensuring that you don’t have to pay legal, court costs or compensatory damages.
Using our network of insurance providers, Reliance Insurance can help business owners identify and prevent potential losses from their products. From every day, non-hazardous products, to businesses that manufacture potentially hazardous products, we can tailor a package to suit your needs.
Also consider USA and International liability insurance coverage because going global has never been easier thanks to the Internet and sophisticated, world-wide logistics. Doing business in the United States can open up an organization’s marketplace. However, with great opportunity comes great risk. Are you properly insured for the litigious US marketplace? USA and International Coverage can help your business. At Reliance Insurance, we are fortunate to have senior staff who have lived and worked in the United States and are experts in the diverse products required to protect you from product liability, compliance risk, ambiguous and highly litigious contract wording, class action lawsuits, and cross-border trade issues.
3) Media crisis training
Lightning-fast social media and a hungry, 24-hour news cycle should be enough reason to receive media crisis training BEFORE a crisis even occurs. Timing, tact, and tone are key elements, that when used correctly, can really make a difference with both negative media coverage and customer relations during a product recall.
At Reliance Insurance, we have unique access to the very best crisis media consultants and offer that access to clients as part of our ongoing work to ensure you are always ready, even for what you don’t want.
Resources
Canada’s Recall and Safety Alert list
Reliance Product Liability insurance
USA and International Liability insurance
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