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Monday April 01, 2013
Settlement Agreement with Kolcraft Signals new CPSC Strategy for Civil PenaltiesBy Don Mays
The recent agreement by Kolcraft Enterprises, Inc. to pay a $400,000 civil penalty for failure to report potential hazards associated with their play yards had an interesting twist. The agreement with the CPSC included a provision that will require the company to implement robust improvements to its internal controls and compliance systems. Among the requirements:
The CPSC’s requirement for robust process improvements placed on Kolcraft may signal a need for other companies to strengthen their safety and quality assurance programs. Financial penalties may be viewed by some companies as simply the cost of doing business. But requiring process improvements serves as a proactive measure for avoiding missteps altogether. Retailers and manufacturers should view this new strategy as an opportunity to evaluate and strengthen their own safety and quality assurance process to make sure compliance is beyond question.
But compliance with regulations should simply be viewed as the license to sell products. Compliance does not necessarily guarantee safety. Nor does it prevent all risks to consumers or the reputational and financial risks to companies that bring unsafe products to the market. For that, companies are well advised to develop even more robust processes and controls.
Don Mays is director in the Product Safety and Quality practice for Deloitte & Touche LLP. dmays@deloitte.com, 917-561-2906
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