Last month, U.S. Representative Grace Meng (D-NY) announced that she has reintroduced legislation—the Total Recall Act—to change the way that businesses notify the public about recalls. The text of the legislation can be found here.
H.R. 3724, entitled the “Total Recall Act,” requires firms engaged in a product recall to post recall notices on their websites and all social media accounts, and also spend a defined amount of money on publicizing the recall depending upon whether it is mandatory or voluntary. For a mandatory recall, which is an incredibly rare event, businesses would be required to expend a sum of money that equals at least 25% of what the firm spent on marketing the product prior to its recall. On the other hand, for common voluntary recalls, firms would be required to use at least 25% of the product’s original marketing budget as well as 100% of the product’s social media marketing budget on publicizing the recall. The bill would also mandate that the U.S. Consumer Product Safety Commission provide an annual report to Congress on participation rates for each recall.
Currently, the CPSC allows for recalling firms to use a variety of methods to notify consumers about product recalls, though it typically requires firms to take such actions as publishing a joint press release; posting the release on the company’s website and social media accounts and in brick and mortar stores; and sending approved letters to consumers and retailers and supply chain partners. The Consumer Product Safety Act provides the CPSC specific authority to require notice of recalls on Internet sites when it orders a recall and the CPSC has routinely required website postings for voluntary recalls. However, there are no such rules, formal or informal, recall spending and budgeting practices. That would be something entirely new.
This bill is the latest effort in a string of actions emanating from Capitol Hill that seeks to enhance product safety through legislation and oversight. For example, on April 22, Senator Richard Blumenthal (D-CT) and Representatives Jan Schakowsky (D-IL) and Bobby Rush (D-IL) introduced legislation—the Sunshine in Product Safety Act—that would fully repeal Section 6(b) due process safeguards provided to companies in the Consumer Product Safety Act. You can read more about that bill here. Then, on June 7, 2021, the House Oversight Committee held a hearing related to the recall of certain infant inclined sleepers.
It is unclear whether this bill has a chance of being adopted by the House of Representatives, let alone passing the Senate and being signed into law. Perhaps tellingly, last year, this legislation was not included amongst a number of product safety bills voted out of the House Energy and Commerce Committee. Although Congresswoman Meng is a visible and well-respected member of the House Democratic Caucus, she does not sit on the relevant committee of jurisdiction—House Energy and Commerce. And, interestingly, some of the leading House Democratic consumer advocates, such as Representative Jan Schakowsky (D-IL), are not a primary sponsor of the bill. Nevertheless, in the event that the legislation passes both chambers, we would expect President Biden to sign the bill into law.
Please feel free to reach out to us with any questions, and we will continue to update our clients and friends on this important issue affecting information disclosure by the Commission.