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February 14, 2024 - Consumer Products, CPSC

Proposed Bill Seeks to Remove Cap on Civil Penalties Issued by CPSC

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On January 25, 2024, Representative Jan Schakowsky (D-IL) introduced the Consumer Advocacy and Protection (CAP) Act, which would amend the Consumer Product Safety Act (CPSA) to increase the maximum civil penalty for a single violation of the CPSA from $100,000 to $250,000 and remove the $17,150,000 inflation-adjusted maximum cap for a series of violations. The legislation would also allow the Consumer Product Safety Commission (CPSC) to adjust the $250,000 per violation civil penalty for inflation each year, rather than every five years as allowed under the current CPSA. If enacted, the CAP Act would significantly impact how consumer product companies approach compliance with the CPSA.

This bill follows CPSC’s recent increased and aggressive enforcement efforts. In recent years, CPSC has heightened the pressure on consumer product companies by using the different enforcement mechanisms in its toolbox—the number of recalls, unilateral press releases, and civil penalty amounts have all significantly increased in the last three years. Commissioner Richard Trumka summed up CPSC’s new attitude in a May 5, 2023 statement in support of a civil penalty settlement, explaining, “This Commission will use every tool at its disposal to stop bad actors from harming consumers, including maximum civil penalties and, where warranted, criminal referrals.”

At the same time, CPSC Commissioners and consumer advocacy groups have been calling on Congress to increase the civil penalty maximum and provide CPSC with additional enforcement tools. For example, since Commissioner Mary Boyle was confirmed in June 2022, she has repeatedly urged Congress “to significantly increase CPSC’s penalty authority.”[1] It is her position that businesses “may consider the current penalty regime merely a cost of doing business” and increased maximum penalties are needed to “penalize bad actors and to incentivize companies of all sizes to make consumer safety a top priority.” Consumer product safety advocacy groups like Kids in Danger, Consumer Federation of America, and the U.S. Public Interest Research Group, which have all endorsed the CAP Act, have echoed Commissioner Boyle’s sentiments.

Representative Schakowsky, one of the CAP Act’s co-sponsors, frequently spearheads consumer product safety legislation and measures in Congress. In 2021, she introduced the Sunshine in Product Safety Act, which would broaden one of CPSC’s enforcement mechanisms by repealing Section 6(b) of the CPSA. Section 6(b) requires CPSC to provide companies with an opportunity to comment before CPSC makes public statements about them. This includes unilateral press releases that CPSC intends to publish. Companies have no authority to block a unilateral press release unless it contains materially inaccurate information, but Representative Schakowsky and other critics claim it delays and restricts CPSC’s authority to promptly and effectively warn the public about product safety hazards. She reintroduced the bill in 2023 but has failed to garner the necessary support to push it through Congress.

If the failed Sunshine in Product Safety Act is any sign, then the CAP Act faces an uphill battle in Congress. But even if it is not enacted, the CAP Act reflects CPSC’s demonstrated commitment to increasing enforcement of reporting obligations, highlighting the importance of understanding and complying with consumer product safety laws and regulations. Consumer product companies need to have a plan in place to evaluate and respond to information that may trigger their reporting obligations. They must also ensure they are taking a thoughtful and measured approach to compliance. Morrison Foerster’s Product Life Cycle group helps companies navigate the evolving enforcement landscape to find business-friendly compliance solutions.

[1] Press Release, Commissioner Mary T. Boyle Statement on HSN’s Agreement to Pay $16.0 Million Civil Penalty (Nov. 8, 2023). See also Press Release, Commissioner Mary T. Boyle Statement on BJ’s Agreement to Pay $9.0 Million Civil Penalty (Sept. 29, 2023) (“To penalize bad actors and to incentivize companies of all sizes to make consumer safety a top priority, I am urging Congress to significantly increase CPSC’s penalty authority.”); Press Release, Commissioner Mary T. Boyle Statement on Whirlpool Corporation Agreement to Pay $11.5 Million Civil Penalty (Aug. 24, 2023).