Consumer Product Safety Commission (CPSC) fall update 2024

Federal law requires each agency to publish, twice a year, a regulatory agenda of regulations under development or review during the next year. 58 FR 51735. Agencies may combine this agenda with the regulatory flexibility agenda required under the RFA. The agenda required by Executive Order 12866 must include all the regulations the agency expects to develop or review during the next 12 months, regardless of whether they may have a significant economic impact on a substantial number of small entities. So with that backdrop we take a look at the Semiannual Regulatory Agenda proposed by the Consumer Product Safety Commission on August 16 2024.

The first thing we noticed is the absence in the Semiannual Regulatory Agenda (SRA) of any reference to the looming "electronic certificates of compliance" which we last reported on in Feb 2024. It was announced today (Sept 4 2024) that the "final" rule would be issued in 2025. No idea when it will be made effective but we suspect 3-6 months after issuance. This will have a huge effect on the bike industry depending on how 16 CFR 1512 is interpreted by the commission (if its viewed as complete bike regulation or a component regulation) and how our Feb 2024 comments are dealt with by the commission. (no word on that yet) 

Also there is a lack of any information in the SRA related to "e-bikes" or "e bike batteries" as well. Don't forget the huge fanfare regarding this meeting in July 2023 and now, you guessed it, crickets from CPSC. We will keep you posted on the latest regarding the forgoing. But it does not look like a very active year for CPSC as it relates to bikes, e-bikes or e bike batteries. I guess we will have to wait for Congress to act.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2020 Conditions of Use

Federal Trade Commission Announces Final Rule Regarding Fake Reviews and Testimonials

There is a lot in this new rule (adopted Aug 14 2024), and as always the devil is in the details. This is the main FTC announcement here and the full 163 page justification, selected outside comments and the actual rule (starting at page 153) here which we have yet to digest. The government is not paid by the word so we are not sure why this is so wordy. I guess anticipating fights with crafty private sector defense attorneys! As always the devil is in the details and the specific wording and interpretation of the rule by the FTC is key. Once of the issues of interest to us is bike and recreational product companies love to use "paid" athletes to post reviews about product (along with endorsements of the product on their private social media accounts like Instagram and the like). I am assuming that those people would be considered "agents" under the rule. (unfortunately the rule itself does not define "agent") Given that understanding this is the FTC's bullet point (one of many):

Insider Reviews and Consumer Testimonials: The final rule prohibits certain reviews and testimonials written by company insiders that fail to clearly and conspicuously disclose the giver’s material connection to the business. It prohibits such reviews and testimonials given by officers or managers. It also prohibits a business from disseminating such a testimonial that the business should have known was by an officer, manager, employee, or agent. Finally, it imposes requirements when officers or managers solicit consumer reviews from their own immediate relatives or from employees or agents – or when they tell employees or agents to solicit reviews from relatives and such solicitations result in reviews by immediate relatives of the employees or agents.

There is sure to be a thorough examination of product reviews and reviewers going forward as well as the process involved in making sure this rule is followed and we all know who is looking at this carefully...Amazon and other big retailers.

Hopefully in the coming weeks we will be adding more to this post above.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2020 Conditions of Use

Analysis: CPSC's Amazon decision is a reminder to the industry

Originally Published August 1, 2024

(this story is reprinted with Permission from this original post)
Editor's note: Industry attorney Steven Hansen shared the following analysis of this week's administrative decision by the Consumer Product Safety Commission, which found that Amazon should be considered a distributor of the products it sells, and is therefore responsible for the safety of the products. Hansen's website is www.swhlaw.com.

This is a very critical administrative decision  (read it here) by the Consumer Product Safety Commission. This case was brought by the CPSC against Amazon in July of 2021 and was just resolved this July 2024. I suspect Amazon will appeal this decision to a federal court as it's a big decision against Amazon.

What we find interesting and enlightening for our readers is two points.
First, Amazon argued before an Administrative Law Judge and the Commission that it was not a "distributor" and thus bore no responsibility for the safety of the products sold under its "Fulfilled by Amazon" (FBA) program.

Secondly, this is a reminder to all distributors and retailers out there in consumer product land that the CPSC regulations place a legal recall obligation on all entities in the chain of distribution of the product. This means if the brand (in the USA) or the manufacturer (usually in Asia and usually will not initiate voluntary recalls) does NOT conduct a recall, then you (the distributor, importer or even main retailer) may have the obligation to do so as the next entity down the chain.
The recall obligation is generally when any product does not comply with a federal safety law (ie 16 CFR 1512 et seq) or when the product may comply with a federal regulation but still contains a "substantial product hazard." Amazon knew the second point and so it just tried to argue it was NOT a distributor. 

What we find interesting is that the Amazon case was filed about a year after California's watershed decision also held that Amazon was a "distributor" or "seller" in its FBA programs. (FYI the appeals court judge that wrote that opinion is now the Chief Justice of the California Supreme Court, if that tells you something). 

Given what is at stake for Amazon expect this to be appealed and as all states and federal districts are not aligned on this issue for Amazon being a true distributor the district or judges where this appeal is heard will be critical.

Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2020 Conditions of Use