If You See Something, Say Something

It’s a catchy phrase first used by the Department of Homeland Security in 2010, when the DHS launched the national "If You See Something, Say Something" campaign. The campaign was intended to help emphasize the importance of reporting suspicious activity to law enforcement and to raise awareness of the indicators of terrorism and terrorism-related crime. Credit where credit is due, though, the phrase was actually first coined by New York City’s Metropolitan Transportation Authority (MTA), then licensed to DHS.

Anyway, what does that have to do with potentially dangerous or unsafe promotional products? Great question. It turns out the Consumer Product Safety Commission is not just asking you to report issues of product failure, they’ll fine you if you turn a blind eye long enough. And that applies to suppliers and distributors alike.

In one of the most significant developments in product safety law in the last several years, Gree Electric Appliances Inc. of Hong Kong and its subsidiary Gree USA, pled guilty to willfully failing to report product failures to the CPSC as required by the Consumer Product Safety Act (CPSA). According to the U.S. Department of Justice and the CPSC, the Gree Companies knew dehumidifiers they manufactured were defective, failed to meet safety standards, and could catch fire. Gree failed to timely disclose that information to the CPSC. While CPSC civil penalties for not reporting have become fairly routine, (in fact the Gree Companies paid what was then a record $15.45 million civil penalty in 2016), this is the first time that corporate criminal enforcement action has been taken under the CPSA requirements.

Think you don’t need to be concerned about selling electronics with batteries a little on the sketchy side? You know, those you don’t have test results for since you just sourced the electronics, but not the battery manufacturer? Do you know how many sales of faulty products it takes to get on the Fed’s radar?

In filings for this case, the DOJ alleges “egregious conduct” by the Gree Companies, and makes accusations beyond failing to report, including selling products known to be defective, using fake UL certifications, and generally lying to the public about the safety of their products. Other liability trials have heard evidence the Gree Companies didn’t inform retailers of the full scope of affected products and delayed their recall announcement so that products that should not have been sold could be distributed to unsuspecting consumers. Could your organization survive the kind of penalties the Gree Companies will have to pay? As just a partial settlement, there’s a $91 million penalty and restitution to any uncompensated victims of fires caused by the defective dehumidifiers. Your boss could be on the hook, as well. In this matter, two Gree USA executives have been charged criminally by the DOJ and await trial.

So, let’s say all this has opened your eyes to the risk of averting them when you come across unsafe promotional products, just what is it you should do? Like we said before, if you see something, say something. Under the Consumer Product Safety Act, manufacturers, distributors, and retailers that “obtain information which reasonably supports the conclusion that their product contains a defect which would create a substantial product hazard, or that creates an unreasonable risk of serious injury or death, must immediately inform the CPSC of the defect.” You don’t need to be the compliance officer in your company to understand the need for proper safety and sourcing protocols, and don’t settle for anything less than documentation that products you sell meet the applicable federal and state safety rules. On top of that, you need to ensure that documentation is supported by legitimate testing. Product safety is literally EVERYBODY’S responsibility in the eyes of the CPSC and DOJ. If you ever doubted it, this cautionary tale should let you know you are on the hook for it, so embrace it. It’s good for both you and your clients.