CPSC’s 2024 Year in Review

In recent years, the Consumer Product Safety Commission (CPSC) has increased pressure on consumer product companies through various enforcement mechanisms. The increase in the frequency and amount of civil penalties sought by CPSC is a prime example.

CPSC has the authority to seek civil penalties if a company knowingly fails to comply with reporting obligations under the Consumer Product Safety Act (CPSA). Under the CPSA, manufacturers, distributors, and retailers of consumer products must report to CPSC upon obtaining information that reasonably supports the conclusion that its product (1) fails to comply with a consumer product safety rule, (2) contains a defect that could create a substantial product hazard, or (3) creates an unreasonable risk of injury or death.

Companies violate the CPSA if they knowingly fail to report actual or presumed knowledge of reportable information. Civil penalties shall not exceed $120,000 for each violation of non-disclosure per Section 15(b) of the CPSA and may not exceed $17.15 million for a related series of violations.

Since the start of Fiscal Year 2024, CPSC has imposed civil penalties on two companies: HSN Inc. and Bestar.

On November 8, 2023, CPSC announced that HSN agreed to pay a civil penalty of $16 million. The agreement resolved CPSC’s charges that HSN knowingly failed to immediately report to CPSC that two of its handheld clothing steamers contained a defect that could create a substantial product hazard or risk of serious injury to consumers.

According to CPSC, between 2012 and 2019, HSN received multiple reports that the steamers could spray, expel, and/or leak hot water that resulted in serious and permanent injuries. CPSC alleged HSN did not immediately report to the Commission after obtaining information triggering HSN’s duty to report. HSN and CPSC jointly announced a recall of the steamers on May 26, 2021. On top of the $16 million penalty, the settlement requires HSN to maintain internal procedures to ensure compliance with the CPSA and provides that HSN must conduct annual internal audits of the effectiveness of its compliance policies.

On November 18, 2024, CPSC announced that Bestar agreed to a $16.025 million civil penalty, resolving CPSC’s allegation that Bestar knowingly failed to report that its wall beds contained a defect. CPSC asserted that from 2014 to 2022, Bestar received reports from consumers that its wall beds could come detached from the wall. According to CPSC, by the time Bestar reported the issue to CPSC, Bestar had already been made aware of 35 incidents, including one fatality and 15 injuries.

Civil penalty amounts following CPSC investigations into companies’ alleged failure to report have made headlines in recent years. CPSC continues to insist on larger civil penalties in settlement agreements with companies, as the settlements with HSN and Bestar demonstrate. During Fiscal Year 2023 (from October 1, 2022 to September 30, 2023), the total and average civil penalty amounts jumped significantly compared to prior years. At the close of FY 2023, CPSC Commissioner Trumka made a statement summarizing the year’s civil penalties: “Today’s penalty notice ends a fiscal year of active enforcement by CPSC staff. . . . Civil penalties in FY 2023 reached over $52 million, a 64% increase in penalties levied relative to FY 2022.”

CPSC has followed through on its commitment to increase enforcement of consumer product safety laws. The Commission is expanding its staff to increase enforcement measures and is pushing for more resources and authority to continue its expansion. It remains to be seen whether the coming administration transition will have an impact on this trend.

These changes make it even more important for companies to understand and comply with consumer product safety requirements. Consumer product companies need to have a plan in place to evaluate and respond to information that may trigger their reporting obligations and should also ensure they are taking a thoughtful and measured approach to compliance.