|April 14, 2014|
Previously published on April 09, 2014
For the first time in nearly a year, a unanimous U.S. Consumer Product Safety Commission (“CPSC”) announced that a company will pay a hefty civil penalty and enact a strict compliance program to resolve allegations regarding its reporting practices. This announcement comes almost one year after three similarly structured civil penalties were levied by the CPSC against Ross Stores, Kolcraft and Williams Sonoma. Importantly, the settlement reached with the New Jersey-based, clothing retailer Forman Mills, like the ones entered into last year, mandates the implementation and maintenance of a comprehensive compliance program. This recent trend continues to be a notable, and controversial, one.
Specifically, the settlement agreement announced this week resolves charges by CPSC staff that Forman Mills, a retailer of lower-priced designer clothing, failed to report timely its sale of banned children’s upper outerwear containing drawstrings between June 2007 and February 2010. The sale of some of these garments took place while the company negotiated a prior settlement with the CPSC to resolve similar charges in 2009.
Perhaps most notably, in addition to paying a $600,000 fine, Forman Mills has agreed in the settlement to implement and maintain a comprehensive compliance program designed to ensure the company’s compliance with safety standards for these garments. The program will include the following elements:
Written standards and policies;
- Procedures for implementing corrective and preventive actions when deficiencies are identified;
- A mechanism for confidential employee reporting of compliance related questions or concerns;
- Training programs in applicable policies;
- Senior manager responsibility for compliance and accountability;
- Board oversight; and
- Retention of documents for at least 5 years
The program also aims to ensure that Forman Mills will follow the CPSC’s product incident reporting requirements in the future. CPSC enforcement actions, including this one against Forman Mills, underscore the point that all retailers, manufacturers, and importers must assess current product testing and CPSC reporting practices and remain vigilant concerning their independent product safety compliance and reporting obligations. The safety of consumer products is receiving increased scrutiny from federal and state governments and the CPSC is assessing higher penalties throughout the distribution chain for violations of underlying regulatory and reporting requirements, not to mention mandating the implementation of stringent compliance programs.