Retailer Consumer Product Compliance Policy for Suppliers | Practical Law

Retailer Consumer Product Compliance Policy for Suppliers | Practical Law

A retailer policy establishing standards and guidelines for suppliers of consumer products that are regulated by the Consumer Product Safety Commission (CPSC). This policy is designed to ensure that consumer products provided by a supplier to a retailer who is not an importer or private labeler are safe, compliant, and high quality. It includes guidelines for General Certificates of Conformity (GCC), children's products, product testing, supplier assessments, audits, and CPSC section 15(b) reports. This Standard Document has integrated drafting notes with important explanations and drafting tips.

Retailer Consumer Product Compliance Policy for Suppliers

Practical Law Standard Document w-009-2891 (Approx. 24 pages)

Retailer Consumer Product Compliance Policy for Suppliers

by Practical Law Commercial Transactions
Maintained • USA (National/Federal)
A retailer policy establishing standards and guidelines for suppliers of consumer products that are regulated by the Consumer Product Safety Commission (CPSC). This policy is designed to ensure that consumer products provided by a supplier to a retailer who is not an importer or private labeler are safe, compliant, and high quality. It includes guidelines for General Certificates of Conformity (GCC), children's products, product testing, supplier assessments, audits, and CPSC section 15(b) reports. This Standard Document has integrated drafting notes with important explanations and drafting tips.
Note: Read This Before Using Document
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Read This Before Using Document

US retailers of consumer products are tasked with providing consumers high quality goods at the lowest possible cost while still providing an exceptional shopping experience. This task is complicated by the fact that consumer products in the US are subject to numerous and complex regulations enforced by federal and state agencies. Retailers must manage their supply chains to ensure the products they sell are compliant with US law. To do otherwise would put a retailer at risk of:
  • Product recalls.
  • Supply disruptions.
  • Regulatory enforcement actions.
  • Brand and reputational harm.
  • Penalties.
  • Lawsuits.
  • Economic injury.
Retailers are therefore motivated to safeguard their supply chains by instituting controls aimed at ensuring the products they sell to consumers are safe, compliant, and high quality. Suppliers play a crucial role in providing US retailers with product. They therefore also play a crucial role in the mission to offer safe and compliant products to consumers. This policy provides suppliers with retailer guidelines and controls for ensuring that the consumer products supplied to a retailer are compliant and of satisfactory quality.

Covered Suppliers

Retailers should ensure that the policy applies to all suppliers who provide them with CPSC-regulated consumer products. The term "suppliers" used in this policy therefore includes domestic suppliers, including:
  • US-based importers of foreign product.
  • Vendors.
  • Wholesalers.
  • Distributors.
  • Manufacturers.

Importer Retailers and Private Labelers

This Standard Document does not apply to consumer product imported by a retailer for sale to consumers in the US. It further does not apply to retailers who purchase private label products from suppliers. These retailers should instead see Standard Document, Retailer Consumer Product Compliance Policy for Suppliers (Direct Import and Private Label Products).
US retailers sometimes choose to import foreign products in an effort to save on costs. These retailers may import directly from the product manufacturer, a process known as direct import. Direct imports reduce costs by eliminating middlemen suppliers. US retailers also often engage in private labeling, or labeling products with their own brand name and logo.
Both of these approaches may increase regulatory responsibility on the part of the retailer and therefore call for stricter supplier policies. For example, retailers who import or directly engage private label contractors should consider implementing the stricter policies regarding:
  • Product compliance certification and recordkeeping.
  • Supplier product testing programs.
  • Product sample selection and testing.
  • Supplier assessments and audits.
  • Reporting obligations to government agencies.

Covered Products

Consumer Product Safety Commission (CPSC)

This policy requires that supplier-provided consumer products meet US Consumer Product Safety Commission (CPSC) legal standards for product safety and meet or exceed industry standards for quality and durability. The standards set out in this policy cover:
  • Compliance with laws enforced by the CPSC.
  • Certification of compliance by General Conformity Certificates (GCCs) or Children's Product Certificates (CPCs).
  • Retailer review of test reports.
  • The exchange of adverse event information between a retailer and a supplier.
  • Supplier assessments and audits.
  • Reporting to government agencies.
  • Recalls and product withdrawals.
The CPSC is an independent US federal agency with an objective to protect the public from unreasonable risks of injury or death caused by imported and US-made consumer products. The CPSC furthers this objective by researching product hazards and issuing voluntary safety standards, mandatory safety standards, and bans. The CPSC enforces the standards and bans through mandatory adverse event reporting, product recalls, compulsory compliance programs, and civil penalties.
The CPSC has jurisdiction over most consumer products under:

Federal Trade Commission (FTC)

This policy requires that supplier-provided consumer products also meet US labeling requirements, most of which are enforced by the FTC. FTC labeling requirements can be found in:
  • The Fair Packaging and Labeling Act.
  • The Federal Trade Commission Act (FTC Act).
  • The Care Labeling of Textile Wearing Apparel and Certain Piece Goods.
  • The Energy and Water Use Labeling for Consumer Products Under the Energy Policy and Conservation Act (Energy Labeling Rule).
  • The Fur Products Labeling Act.
  • The Textile Fiber Products Identification Act.
  • The Wool Products Labeling Act.
  • Reese's Law (which regulates button cell or coin batteries).
For more information regarding FTC labeling requirements for consumer goods, see Practice Note, FTC Labeling Requirements for Consumer Goods.

Excluded Products

Certain products are excluded from the CPSC's jurisdiction and therefore excluded from being covered by this policy. The excluded products are those generally under the jurisdiction of other agencies, including:
For more information on the CPSC's regulation and enforcement of consumer product issues, see Practice Notes:

Children's Products

All children's products are subject to distinct labeling, testing, and certification requirements. A children's product is a product that is intended for a child 12 years of age or younger. When determining if a product is a children's product, the product's labeling, marketing, and commonly recognized use should be considered. Due to the more stringent regulation of children's products by the CPSC and the fact that the majority of CPSC product recalls are for children's products, retailers should require suppliers to be especially knowledgeable and vigilant regarding the compliance of these products. This Standard Document offers options that are specific to retailers of children's products. For more information regarding children's products, see Practice Note, Children's Product Compliance.

Terms of Supplier Agreements

This policy is designed to outline controls and standards that suppliers of consumer products must follow to sell goods to or do business with a retailer. This policy does not cover all aspects of the association between a retailer and a supplier. The legal relationship between a retailer and supplier often is governed by terms and conditions contained in a sale of goods agreement or other agreement. The relationship is frequently governed by several other policies and documents, including this document, vendor compliance standards, and routing guides, which are explicitly or implicitly incorporated by reference into the terms and conditions of sale. The retailer must ensure that there is no conflict between the terms of its policies and its sale agreement.

Bracketed Items

Bracketed items in ALL CAPS should be completed with the facts of the transaction. Bracketed items in sentence case are either optional provisions or include alternative language choices to be selected, added, or deleted at the drafting party's discretion.

Supplier Consumer Product Compliance Policy

1.Purpose.
[NAME OF RETAILER] ("Retailer") sells consumer products to consumers that are subject to [a wide range of ] federal[, state][, and local] legal requirements relating to the sale, manufacture, testing, certification, and distribution of such products. These requirements are designed to safeguard US consumers. As a retailer, we strive to meet or exceed the highest compliance, safety, and quality standards set out in these and other laws (and related regulations), as well as industry standards and best practices. We only purchase products from and do business with suppliers who agree to meet or exceed such standards.
This Supplier Consumer Product Compliance Policy ("Policy") sets out our minimum expectations with respect to these standards and applies to all domestic and foreign suppliers, including, but not limited to, importers, exporters, vendors, distributors, wholesalers, and manufacturers ("Supplier") who sell products to Retailer [for resale to consumers], whether manufactured in the US or outside of the US ("Supplier Product").
Accordingly, this Policy reiterates our commitment to the compliance, safety, and quality of the consumer products we sell and explains the specific requirements and prohibitions applicable to Supplier, including, but not limited to, the Consumer Product Safety Improvement Act of 2008 (CPSIA) and the Fair Packaging and Labeling Act (FPLA). This Policy contains information intended to reduce the risk of harm to consumers, violations of the law, and financial loss due to product recalls. Supplier shall comply with all the provisions set out in this Policy and ensure compliance by their employees, agents, and its third-party representatives.
Retailer will take all necessary and legally required steps to protect consumers and comply with government agency requirements, including, but not limited to, ceasing all sales and refusing all inbound shipments of non-complying Supplier Products, filing reports with government agencies, and initiating product recalls. Supplier shall bear all costs associated with Supplier Products that do not comply with this Policy, including, but not limited to, the cost of removing non-complying Supplier Products from Retailer's retail and distribution locations, whether or not implemented as part of a product recall.
Note: Purpose
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Purpose

Product compliance policies should clearly inform suppliers of the purpose of policy. However, clear statements of purpose in policy documents that are made available to the public can also serve to communicate to customers, regulators, and the media a retailer's good intentions. Product compliance policies should make clear statements regarding:
  • A retailer's dedication to compliance with the law and the protection of its customers.
  • The retailer's expectation that vendors make compliance with the law and protection of the retailer's customers a top priority.
  • Specific laws most relevant to the products the retailer purchases from product vendors, in this case, consumer products, as well as language regarding general compliance with all laws applicable to the product.
  • The necessity that vendors understand and abide by legal requirements, including newly passed legislation, rules, industry standards, or market best practices.
  • Prohibitions against noncompliant parts, products, testing, certifications, and transactions.
  • A retailer's willingness to comply with government agency reporting requirements and information requests.
  • Supplier obligations to cover the costs arising from the supply of noncompliant product.
The terms of this policy are in addition to the terms of [SUPPLIER AGREEMENT]. If a conflict exists between this Policy and [SUPPLIER AGREEMENT], the terms of the [SUPPLIER AGREEMENT] shall prevail.
Note: Applicability to Suppliers and Products
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Applicability to Suppliers and Products

This policy applies to all:
  • Suppliers of products to a retailer (see Drafting Note, Covered Suppliers).
  • Consumer commodity products that are regulated by the Consumer Product Safety Commission (CPSC) and the Federal Trade Commission (FTC) (see Drafting Note, Covered Products), including:
    • toys and other children's products;
    • durable infant or toddler products;
    • appliances;
    • household chemicals;
    • household goods, such as lamps, fans, and televisions;
    • fabrics;
    • power tools;
    • art materials;
    • swimming pools and spas;
    • candles and cigarette lighters;
    • button cell and coin batteries;
    • child-proof packaging for certain drugs and other household substances; and
    • apparel, including items made of fur.
Retailers should carefully consider the nature of their supply chain and what agreements exist between it and its suppliers. If the suppliers are subject to multiple agreements, policies, and process directives with the retailer, this section should clearly define the order of precedence. Retailers should seek to fully understand all obligations placed on suppliers through various agreements and policies and seek to minimize conflicts between terms as much as possible.
For examples of other types of supplier policies used by retailers, see Standard Document, Supplier Code of Conduct Poster and Practice Note, Retailer Routing Guides. For an example of agreements between a supplier and a retailer for the purchase of goods, see Standard Documents:
2.Product Compliance.
Retailer strives to adhere to the highest compliance, safety, and quality standards. In order to ensure that these standards are met, Retailer requires Supplier to adhere to industry best practices and to meet or exceed the standards outlined in this section.
(a)Compliance with US law. Supplier Product must comply with US laws, including but not limited to:
(i)The Consumer Product Safety Act of 1972.
(ii)The Federal Hazardous Substances Act.
(iii)The Child Safety Protection Act.
(iv)The Flammable Fabrics Act.
(v)The Consumer Product Safety Improvement Act of 2008.
(vi)The Fair Packaging and Labeling Act.
(vii)The Federal Trade Commission Act (FTC Act).
(viii)[Care Labeling of Textile Wearing Apparel and Certain Piece Goods.]
(ix)[The Energy and Water Use Labeling for Consumer Products Under the Energy Policy and Conservation Act (Energy Labeling Rule).]
(x)[The Fur Products Labeling Act.]
(xi)[The Textile Fiber Products Identification Act.]
(xii)[The Wool Products Labeling Act.]
(xiii)[The Children's Gasoline Burn Prevention Act.]
(xiv)[The Virginia Graeme Baker Pool and Spa Safety Act.]
(xv)[The Refrigerator Safety Act.]
(xvi)[The Poison Prevention Packaging Act.]
(xvii)[The Labeling of Hazardous Art Materials Act.]
(xviii)[Reese's Law for button cell and coin batteries.]
The provisions of these laws include requirements for design, labeling, instructions, warnings, registrations, and testing that may be product specific. Supplier must maintain a full understanding of all existing and new US [and [STATE OR OTHER JURISDICTION]] product-specific legal requirements, voluntary standards, industry standards, and best market practices applicable to the products they supply to Retailer to ensure Supplier Product compliance.
This Policy does not apply to products not regulated by the Consumer Product Safety Commission, including foods, cosmetics, drugs, or medical devices.
(b)General Compliance. Supplier shall maintain all certifications, credentials, licenses, and permits necessary to conduct its business relating to the manufacture, distribution, and sale of Supplier Product.
Note: Product Compliance
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Product Compliance

Retailers should cater this section of the policy to the products they purchase from suppliers. Large big-box retailers should include most of the laws listed in this section, while a household appliance store should list only those laws related to appliance labeling, energy use, and refrigerator safety. Specialty retailers may sell products regulated by laws that are not listed in this policy but can be added.
For more information regarding the laws listed in this section of the policy, see Practice Notes, US Consumer Product Safety Commission: Overview: Statutory Authority and FTC Labeling Requirements for Consumer Goods.
The laws listed in this section are federal laws related to consumer products, but retailers obligated to abide by state laws regulating consumer products should consider adding the state laws to this list. Examples of state laws regulating consumer products are Washington's Children's Safe Products Act and California's Safe Drinking Water and Toxic Enforcement Act of 1986, which is typically known as Proposition 65. For more information on Proposition 65, see Practice Note, California's Proposition 65: Overview.
3.Product Quality. Supplier shall provide products that are not defective or unsafe for consumer use. Supplier shall utilize a comprehensive quality assurance process and quality controls based on industry standards and market best practices. Retailer [may from time to time request/requires] written copies of quality assurance processes and controls from its Supplier [at [SPECIFIED TIME IN ORDER FULFILLMENT PROCESS]].
4.[Children's Products. Supplier acknowledges that products intended for use by children 12 years of age or younger are subject to more complex and numerous US product safety requirements than general consumer products. Supplier must have a complete understanding of the requirements and Supplier Product must be in compliance with the requirements, including but not limited to:
(a)Toy safety standards.
(b)Phthalates limits.
(c)Lead limits.
(d)Tracking label requirements.
(e)Choking hazard warnings and other required warnings.
(f)Requirements for small children's products or those with small parts.
(g)Product specific requirements, such as for pacifiers, rattles, bicycles and electronic toys.
(h)[Durable Infant or Toddler Goods standards.]
(i)[Flammability standards for children's sleepwear.]
(j)[Drawstring prohibitions for children's clothing.]
In addition to all labeling statements required by US law, Supplier Products that are children's products must be labeled with the appropriate age of a product's intended user.]
Note: Children's Products
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Children's Products

Children's products are heavily regulated within the US and represent the majority of CPSC-enforced product recalls. Retailers who sell children's products should include this section in the policy. Children's products are products intended for children 12 years of age of younger, including toys, games, jewelry, and clothing. For more information regarding how to identify children's products, see Practice Note, Children's Product Compliance: Classifying Children's Products.
Children's products are subject to specific labeling and safety requirements depending on their classification. Determining which requirements are applicable to a product can be a complex analysis and should be performed by a party with in-depth knowledge of US children's product regulation. A full list of the CPSC rules for children's products that trigger compliance testing requirements can be found on the CPSC website. In addition to these standards, most toys and other children's products are prohibited from:
  • Exceeding flammability limits.
  • Containing hazardous chemicals, such as phthalates.
  • Exceeding limits on lead content.
  • Having sharp points and sharp edges.
For more information regarding children's product safety requirements and standards, see Practice Note, Children's Product Compliance: Children's Product Safety Requirements.

Age Labeling

The classification of a children's product is partially dependent on labeling statements regarding the intended age of a product user. For example, a toy with small parts and packaging stating that it is intended for use by children three years of age or older is subject to different labeling and safety requirements than a toy with small parts labeled for intended use by a child eight years of age or older. Children's product labels therefore should state the intended age of appropriate use of the product.
The process used by manufacturers to determine the appropriate age of a product's intended user is referred to as age grading. Age grading and labeling should be based on the CPSC's Age Determination Guidelines, a comprehensive study of what is safe, suitable, and attractive for children of different ages. The age grade assigned to a product should be scrutinized for accuracy by a CPSC-approved laboratory during mandatory product testing.
For more information regarding age grading, see Practice Note, Children's Product Compliance: Age Labeling.
5.Product Certification. Supplier agrees that all shipments of Supplier Product will be accompanied by accurate [General Conformity Certificates] [and/or] [Children's Product Certificates] issued by the product manufacturer or importer. Supplier further agrees to submit to Retailer [General Conformity Certificates] [and/or] [Children's Product Certificates] [in electronic format] for Supplier Product within 24 hours of request by Retailer.
Note: Product Certification
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Product Certification

If a product is subject to product safety standards, the US manufacturer or importer must certify that the product is compliant with US law by issuing a General Certificate of Conformity (GCC) or a Children's Product Certificate (CPC) if the product is a children's product. GCCs and CPCs must be based on product testing (see Drafting Notes, Product Test Reports and Children's Product Testing). The CPSC requires that GCCs or CPCs accompany each shipment of CPSC-regulated products imported into the US.
Retailers who purchase goods domestically are not required to retain records of GCCs and CPCs. However, it is highly recommended that they do so to substantiate the conformance of the products they sell with US law. This policy puts suppliers on notice that they must produce GCCs and CPCs before shipment of the product or at the request of the retailer. For more information regarding GCCs, see Practice Note, Consumer Product Safety Commission General Use Product Compliance: General Certificates of Conformity. For more information regarding CPCs, see Practice Note, Children's Product Compliance: Children's Product Certificates.
6.Product Testing.
(a)General Testing Requirements. Testing is an effective means for managing product quality, durability, safety, and compliance. For many consumer products, certain testing is also required by US law. Supplier shall:
(i)Allow Retailer to randomly test Supplier Product to verify compliance with US law, safety, durability, and quality.
(ii)[Submit valid test reports and other documentation supporting the GCC issued for Supplier Product and evidencing compliance with US law, safety, durability, and quality at least [NUMBER] of weeks prior to shipment to Retailer. Supplier guarantees that all samples used for testing in the test reports provided to Retailer are representative of the product sold to Retailer.]
Note: Product Test Reports
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Product Test Reports

Consumer product testing can assess various product deficiencies that may affect a retailer's supply chain, such as:
  • Noncompliance with US laws.
  • A lack of durability to survive the shipping or distribution process.
  • Low quality.
  • A defect that may cause harm to consumers.
Section 6(a)(i) gives retailers the opportunity to conduct its own testing to verify product quality, compliance, and durability.
Optional Section 6(a)(ii) requires suppliers to submit to the retailer the test reports used to support the GCCs and CPCs that must accompany the supplier's product. Retailers that purchase products domestically are not required to review or retain product test reports from manufacturers, importers, or suppliers, though they should consider doing so. The opportunity to review product test reports before shipment of a product allows for early identification of potential problems, such as:
  • Insufficient or inadequate testing or samples. Retailers should review test reports to ensure they are complete, current, up to the retailer's standards, and performed by an appropriate entity or laboratory. Retailers should also ensure that the sample tested is representative of the product intended for the retailer.
  • Product quality issues or defects. Low quality or defective products may cause customer dissatisfaction, complaints, product returns, and brand harm.
  • Noncompliance with US law. The sale of noncompliant product may subject the retailer to product recalls, government investigations, and other supply chain disruptions.
(b)Children's Product Testing. If Supplier Product is a children's product, test reports must be issued by, and testing must have been performed by, a CPSC approved, third-party testing laboratory.
Note: Children's Product Testing
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Children's Product Testing

All children's products are subject to CPC and testing requirements. Unlike general use products, children's product compliance testing must be performed by accredited laboratories that are:
  • Objective and unbiased, commonly referred to by the CPSC as a third-party laboratory.
  • Accepted by the CPSC to test products to one or more CPSC product safety rules.
For more information regarding children's product testing requirements, see Practice Note, Children's Product Compliance: Children's Product Safety Testing and CPSC Children's Product Safety Testing and Certification: Presentation.
(c)Supplier Testing Program. Supplier who supplies product[, including children's products,] to Retailer are required to submit to Retailer a testing process or program overview at [SPECIFIED TIME IN SUPPLIER ENGAGEMENT PROCESS] for review by Retailer. Retailer may require changes to the program.
Note: Supplier Testing Program
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Supplier Testing Program

This section requires suppliers to submit an overview of their testing program to a retailer for review. Retailers should review a supplier's testing program to validate that the program allows for effective and unbiased testing of a supplier's product.
All testing programs should:
  • Function independently from the influence of other parts of a manufacturer, supplier, or retailer organization.
  • Use testing protocols that meet or exceed all US legal requirements.
  • Confirm the safety, quality, and durability of products.
  • Provide a high degree of assurance that the products that pass testing are in compliance with US law.
7.[Supplier Pre-Production Samples. Supplier is required to provide pre-production samples of Supplier Product. Pre-production samples must be representative of the final product and must be submitted to Retailer or Retailer's agent [NUMBER] days prior to the ship date of the product.]
Note: Supplier Pre-Production Samples
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Supplier Pre-Production Samples

This section gives retailers the option of requiring pre-production samples of products. Retailers may require pre-production samples to preview a product before issuing a purchase order or a production run of a product. Section 7 allows retailers to request pre-production samples for design review and compliance and quality testing. However, test reports based on pre-production samples are not the best indicator of the overall compliance of an entire production run or shipment of product. Manufacturers and suppliers may only have product prototypes available as samples before a major production run of a product. Even if the intent is to develop a prototype that is representative of the final product, duplicating the exact process and materials utilized for the prototype during a major production run can be difficult.
8.Supplier Audit and Inspection.
(a)Retailer or Retailer's agents may, at Retailer's discretion:
(i)Audit and test Supplier Product for compliance with US laws, quality, and durability.
(ii)Audit Supplier's business practices and facilities.
(iii)[Inspect the manufacturing facilities of any manufacturer producing Supplier Product randomly and without prior notice.]
Note: Supplier Audit and Inspection
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Supplier Audit and Inspection

This section allows retailers to audit suppliers at regular intervals to monitor a supplier's compliance with this policy and to validate representations made by a supplier in relation to this policy, such as a supplier's testing program. This section also gives retailers the option of requiring access to manufacturing facilities for periodic or random inspections that can be undertaken at the retailer's discretion by the retailer or by a third party engaged by the retailer.
Periodic audits of suppliers and manufacturing sites allow retailers to assess:
  • The effectiveness of a supplier's quality management program and policies.
  • The method used by a supplier for staying informed of US product safety requirements.
  • The internal controls a supplier has in place to verify product safety and compliance.
  • The inventory count procedures used by a supplier.
  • The production, quality, packaging, and shipping processes.
  • The business practices utilized by a supplier.
  • The potential risks associated with a supplier and how they can be reduced.
If quality, compliance, or other problems are identified during an audit, a retailer should require the supplier to take corrective action to resolve the problems.
(b)[Retailer requires Supplier of Supplier Product to undergo a supplier assessment conducted by Retailer or its agent prior to [the first shipment of Supplier Product/[SPECIFIED TIME IN SUPPLY OF GOODS PROCESS]]. Purchase orders for Supplier Product are contingent upon a satisfactory supplier assessment.]
Note: Supplier Initial Assessments
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Supplier Initial Assessments

This section gives retailers who enter into a supply of goods relationship with a supplier the option to perform an initial assessment of the supplier to confirm the supplier is capable of:
  • Complying with this and other retailer policies.
  • Supplying compliant products in a quantity sufficient to meet the retailers' needs.
  • Ethical business practices.
Initial assessments can evaluate all aspects of a supplier's business, including:
  • Site location and attributes. Retailers should verify that the manufacturing site reported to the retailer actually exists in the specified location and is capable of producing the product ordered by the retailer. Site security, organization, cleanliness, and suitability should also be evaluated.
  • Quality management systems. Suppliers should have systems and controls in place to properly manage product specifications and quality. The quality management system should function independently from the rest of the supplier's business to prevent undue influence over the system.
  • Product inspection. Suppliers should have controls in place to check production at various stages and to properly manage product samples and facilitate product testing.
  • Control over incoming materials and component parts. Suppliers should inspect and have control over all incoming materials. All incoming materials and component parts should be traceable back to their source. Supplier should have a system in place to properly quarantine any noncompliant or nonconforming materials.
  • Employee training. Supplier employees should be adequately trained and properly qualified to perform their jobs.
  • Complaint management. Supplier should have a system for complaint intake, investigation, and escalation.
  • Recordkeeping. Suppliers should have a system for managing, securing, accessing, maintaining, and methodically destroying required and important documentation.
  • Corrective action. Any problems identified by a supplier's quality management system or product inspections should be immediately addressed and corrective actions put in place to prevent problems from recurring. Suppliers should have systems in place to address product defect reporting, government investigations, product recalls, and withdrawals.
Supplier assessments should be performed by trained assessors who are knowledgeable of the industry relevant to a supplier's business as well as the language and customs of the country where the supplier's business resides. Many companies exist who specialize in auditing various points in consumer product supply chains in both the US and abroad.
9.Reporting.
(a)Product Issues. Retailer strives for open lines of communication with Supplier regarding consumer product quality and compliance. Supplier shall immediately notify Retailer of any report made to a government agency regarding Supplier Product. Supplier shall immediately report to Retailer potential and confirmed Supplier Product-related:
(i)Safety issues.
(ii)Quality issues.
(iii)Defects.
(iv)Noncompliance with US laws.
(v)Government investigations related to Supplier Product.
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Product Issues

US retailers and suppliers both bear the burden of CPSC reporting obligations. Once information of a potential product hazard or defect is received by either party, that information should be shared with the other party to facilitate an immediate and thorough investigation of the problem. Both parties likely have information crucial to an investigation. For example, a retailer may have information that it received several customer complaints alleging the same product defect within a short period of time, leading to a conclusion that the complaints are not isolated events and indicate an issue with the product. A supplier may have information regarding a recent product design change that could have caused the defect reported in the complaints. If a supplier sells the same products to several retailers, the supplier has access to broader information regarding customer interaction with the products.
Depending on the severity of the hazard, a retailer may choose to quarantine all inventory of a product while an investigation into the safety of the product is ongoing. For example, a supplier who sells products to multiple retailers may receive a customer complaint alleging that the product caused a fire. If the supplier is compelled to share this information with a retailer who sells the product, the retailer can then make the decision to quarantine its inventory in an abundance of caution and pending the supplier's investigation of the potential hazard or defect.
(b)Complaints. Supplier shall:
(i)Immediately notify Retailer of complaints alleging:
(A)severe bodily harm;
(B)events with the potential to cause severe bodily harm, such as allegations of fire or choking, even if harm does not actually occur; or
(C)product defects, hazards, or lawsuits that trigger a reporting obligation to the CPSC under United States Code Title 15 Sections 2064 and 2084, Section 102 of the Child Safety Protection Act, and 16 C.F.R. Parts 1115, 1116, and 1117.
(ii)Send complaints it receives that are related to Supplier Product to Retailer [monthly/[TIME PERIOD]] for its review.
Note: Complaints
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Complaints

Consumer complaints offer valuable insight into how a product is received by consumers. Complaints and product reviews are the primary way consumers communicate with retailers about the products they purchase. Retailers have an interest in maintaining a robust customer complaint program to satisfactorily meet customers' service expectations. However, aggregated customer complaint data can also provide information regarding product trends. Trends exist when multiple complaints from multiple consumers allege similar events or concerns about a product. If a trend indicates a potential product hazard or defect, even if no consumers have suffered actual harm, a retailer should immediately evaluate its reporting obligation to the CPSC and commence an investigation into the safety and compliance of the product at issue. For more information regarding consumer complaint management programs, see Practice Note, Program for Handling Consumer Complaints.
Section 9(b) gives retailers the opportunity to collect consumer complaints that a supplier receives to add to its aggregate consumer complaint data. Suppliers may receive complaints regarding their products from:
(c)Reports to Government Agencies. Supplier understands that Retailer will comply with all US laws regarding reporting potential and actual product hazards, defects, and noncompliance. If Retailer must file a report regarding Supplier Product with a government agency, Retailer will:
(i)Provide Supplier information to the government agency in the report, as required or requested.
(ii)Notify Supplier [within 24 hours of/prior to] filing the report. [Due to the strict time constraints on the filing of government reports regarding product safety issues, Retailer may not be able to provide notice to Supplier prior to filing.]
Note: Reports to Government Agencies
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Reports to Government Agencies

Under Section 15(b) of the Consumer Product Safety Act of 1972 (CPSA) (15 U.S.C. § 2064(b)), a manufacturer, importer, supplier, or retailer must notify the CPSC as soon as it learns of information that reasonably supports the conclusion that a product:
  • Fails to comply with any CPSC-enforced law, rule, regulation, standard, or ban.
  • Contains a defect that could create a substantial product hazard.
  • Creates an unreasonable risk of serious injury or death.
Section 102 of the Child Safety Protection Act (Public Law 103-267) and its implementing regulations (16 C.F.R. §§ 1117.1 through 1117.9) require a product manufacturer, importer, supplier, or retailer to report information that it receives stating that a child choked on a marble, small ball, or latex balloon, whether sold separately or contained in a toy or game, that led to:
  • Death.
  • Serious injury.
  • Inability to breathe.
  • Treatment by a medical professional.
US law requires reports disclosing product hazards or defects be filed with the CPSC immediately. The CPSC has construed this to mean that they should be notified within 24 hours of a manufacturer, importer, supplier, or retailer obtaining reportable information. The CPSC encourages companies to report potential product hazards even while they are investigating the validity of the information. If it is truly uncertain whether information must be reported, the CPSC allows a reasonable time for investigation but not longer than ten working days unless it can be demonstrated that a longer investigation time is reasonable given the circumstances. It is important that information that may necessitate a report to the CPSC be passed quickly between a retailer and its supplier.
If a report to the CPSC regarding a product hazard or defect must be submitted, retailers and product suppliers with cooperative relationships can decide which party will submit the report. The party best suited to file the report is typically the party with the most reportable information regarding the hazard and the product. This is usually the product manufacturer or US importer. Reportable information includes:
  • Manufacturer name and location.
  • Importer of record name and location, if the product was imported into the US.
  • Import quantity information and the dates of importation.
  • Retailer inventory and sales information.
  • Details regarding the potential hazard or defect, including consumer complaints or other allegations made regarding the product.
The CPSC reporting obligation falls on both retailers and suppliers. Both parties may want to file a report separately to ensure they have met the obligation or if the parties cannot agree on material reportable information. For more information regarding reports to the CPSC, see Practice Notes, US Consumer Product Safety Commission: Overview: Defect and Adverse Event Reporting and Product Recalls: CPSC Reporting Requirements.
10.Product Withdrawals. Retailer may, without prior notice or liability to Supplier:
(a)Cease all sales of Supplier Product.
(b)Quarantine all inventory of Supplier Product under Retailer's control or within its supply chain and retail locations.
(c)Report Supplier Product to relevant government agencies and take action regarding Supplier Product disposition based on government request or order.
Note: Product Withdrawals
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Product Withdrawals

Products that are subject to a CPSC-mandated recall must be quarantined and segregated from other products throughout the distribution chain. However, it may take several days or weeks before the details of a recall are hashed out between the CPSC and the party responsible for the product. Retailers should consider withdrawing products from the stream of commerce by way of ceasing sales and quarantining product inventory as soon as there is reasonable certainty that a product is defective or poses a safety hazard to consumers. This is especially true for seasonal items that sell in larger quantities during short but pertinent periods of time, such as children's costumes right before Halloween. Retailers may want to consider, in an abundance of caution, ceasing sales and quarantining inventory as soon as information that a product may pose an unreasonable risk of injury is received, even if an investigation is required to verify the information. Retailers otherwise may be in a position of explaining to the CPSC and potentially the public why it continued to sell product that turned out to be defective or harmful even after it was put on notice of the defects or harm.
This section makes clear to suppliers that decisions made regarding filing CPSC reports, product disposition, and sales when a product is or is likely to be noncompliant are at the retailer's sole discretion. It is in a retailer's best interest to maintain control over these decisions to best insulate itself from potential penalties and negative publicity. To avoid conflicts, retailers should ensure that this policy matches the recall provisions found in any supplier agreements they might have with their suppliers.
11.Policy Violations. If a Supplier or Supplier Product are found to be noncompliant with US law or with the terms of this Policy, Retailer may:
(a)Reject Supplier Product in whole or in part.
(b)Require specific corrective actions to remedy noncompliance.
(c)Cancel or modify existing contracts with Supplier.
12.Costs. Supplier is responsible for all costs and expenses incurred by Retailer in connection with an investigation, recall, or withdrawal of Supplier Product or Supplier conduct that is in violation of this Policy. Costs and expenses may include those associated with:
(a)Conducting a product recall.
(b)The disposition and destruction of Supplier Product.
(c)Reasonable attorney and professional fees associated with representation in relation to a recall, withdrawal, or investigation.
(d)The cost of enforcing Retailer's right to indemnification and pursuing any insurance providers in connection with Supplier Product or Supplier's conduct.
Note: Costs
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Costs

Recalls and product withdrawals can pose significant costs. This section of the policy makes the supplier responsible for all expenses associated with a product withdrawal, recall, or other violation of this policy. To avoid conflicts, retailers should ensure that the recall, indemnification, and cost provisions within its supply agreements are consistent with this section of the policy. Suppliers may try to exclude or limit recall provisions and recall-related liability in supplier agreements, especially if a retailer initiates a recall or withdrawal without supplier prior consent.
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