Why Product Safety Compliance Still Matters

If anything is clear from the tornado of executive orders in recent weeks, it is that trying to predict how an agency might operate over the next four years is a fool’s errand. The flurry of executive orders, personnel shakeups, and DOGE interventions make this transition unlike any previous one. While some regulators are being constrained (if not eradicated), others are gaining new powers. Meanwhile, smaller agencies, with a less politicized mission, like the CPSC, seem to be flying under the radar, but we don’t know how long that will last. In this environment, it can be very tempting for businesspeople at consumer product companies to cut back on regulatory compliance. This would be a big mistake.

Product safety compliance is more than just the “right thing to do.” It is good business even at times of low or selective federal government enforcement. Compliance protects end users and the brand. Compliance reduces product liability exposure and long-tail regulatory risk, strengthens relationships with retail customers, and makes it easier to sell products in all 50 U.S. states as well as internationally. Compliance also helps ensure that suppliers, especially new ones, are meeting specifications and abiding by supplier agreements.

Managing Product Liability Exposure and Regulatory Risk

We all know the U.S. is a litigious society. Manufacturers and retailers face product liability risks even when their products are fully compliant with applicable safety regulations. However, the exposure is much higher when a product does not meet the minimum standard of care reflected in safety regulations. Ignoring these requirements increases the likelihood of an incident by reducing their product’s inherent safety. When and incident occurs, the potential liability is also greatly increased because of a higher chance of significantly enhanced punitive damages.

Companies also need to remember statutes of limitation. Failure to meet regulations or report safety and compliance issues today can be investigated and lead to civil (and even criminal penalties) in tomorrow’s new administration. It is inevitable that the pendulum will swing back, and future regulators could easily target companies that grew lax with their legal obligations.

CPSC is also not the only entity that can seek enforcement of the Consumer Product Safety Act (CPSA). For example, state attorneys general can bring actions on behalf of their state residents for certain prohibited acts, including manufacture, importation, distribution, and sale of non-compliant products. This may be more common as so-called “blue states” feel the need to pick up the slack from a less active federal government. Finally, the CPSA also gives injured consumers the right to sue a company over violations of mandatory safety standards.

Retail Customer Expectations

Big box retailers and major online marketplaces have developed comprehensive testing and compliance requirements that incorporate federal and state regulations, voluntary standards, and the retailers’ own additional requirements. These requirements are put in place to protect the retailers’ bottom line, and retailers have no incentive to dial these back, even if federal enforcement wanes.

Retailers also have no reason to relax their standards for notifying CPSC of potential product hazards or regulatory violations. Retailers transfer almost all the costs of a recall to the supplier, so they have less to lose from a report to CPSC that leads to a recall. On the other hand, retailers have long been subject to CPSC late-reporting enforcement investigations and big monetary penalties. The potential cost to the retailer of not reporting is much higher than a recall paid for by a vendor. A company that rolls back its internal compliance programs and fails to report an issue that later gets reported by a retailer places itself at much greater risk of a late-reporting investigation and potential penalty under a future administration.

The CPSC is Not the Only Game in Town

Most consumer products sold in the U.S. are made abroad and are also sold in other jurisdictions. While the U.S. regulatory world may be in disarray, product safety regulators around the world have been getting stricter and more active over the last few years (following the lead of the Biden-era CPSC). Companies that wish to sell their products overseas must meet the requirements in other markets. International regulators (and the CPSC) also consider incidents around the world to be reportable in their own jurisdictions. This requires robust product safety and compliance policies and procedures. Companies that abandon these because of weaker U.S. enforcement do so at their peril.

Here in the U.S., “blue” states are actively getting into the product safety regulation space as well. This is especially prevalent with chemical hazards. Multiple states are imposing reporting requirements, restrictions, and bans on substances like heavy metals, phthalates, BPA, flame retardants, and PFAS/PFOA. These states tend to become even more active when there is a federal vacuum. Even if your product is sold in the U.S. only, you need to remember that federal regulations are not the only ones to think about.

Staying on Top of Your Supply Chain

Very few consumer product companies are vertically integrated. Nearly all companies rely on a multinational, complex, and interconnected network of suppliers and sub-suppliers to create their products. Ensuring that this supply chain is providing what the company contracted for is imperative. Product safety compliance, which involves controlling inputs, traceability, and verification through third part testing, provides companies with a window into whether their suppliers are cutting corners or using materials or components from unauthorized third parties.

This is important with established suppliers with whom a company has longstanding ties. It is even more important when companies start working with new suppliers and in new locations. The current administration’s tariff policies are disrupting established supply chains. Many companies are looking to move production out of China or entirely onshore production. This often means relying on new and untested suppliers – and doing so in a rushed timeframe to meet business goals. Existing product safety and compliance policies and procedures can give companies proven frameworks and tools that are invaluable in monitoring these new suppliers.

The temptation to reduce investment in safety compliance is premised on the possibility of reduced enforcement by CPSC. But reduced CPSC enforcement is not a foregone conclusion. Not at all. The current Acting Chair has been a strong and outspoken proponent of increased enforcement and penalties, at least in some cases. In our day-to-day practice, we have not yet seen any reduction in CPSC staff’s dedication to enforcing product safety requirements. With so many unknowns, introducing risk into products by pulling back on compliance would be a shortsighted and expensive move.