What to consider when initiating a voluntary product recall

The Australian Consumer Law (ACL) governs both compulsory and voluntary recalls of consumer goods which present a safety risk.

This article sets out the notification requirements and other practical considerations that you should be aware of, if you are instituting a voluntary product recall of goods for safety reasons and the goods concerned are consumer goods.

This article does not deal with compulsory or mandatory recalls that may be issued by the Commonwealth Minister who administers the ACL.¹

When you must notify the ACCC of a voluntary recall

Suppliers must give the Commonwealth Minister who administers the ACL (via the ACCC) written notice within two days of taking action to recall consumer goods because they present a safety risk, are the subject of a ban or do not comply with an applicable safety standard.² 

The next key threshold questions are:

1. Are the relevant goods “consumer goods”?; and
2. Have you taken action to recall the goods?

If you answer yes to both of these questions, the procedural requirements under the ACL apply and you must comply with those requirements.

Are the relevant goods “consumer goods”?

The ACL provides that goods include:³ 

1. Ships, aircraft and other vehicles;
2. Animals, including fish;
3. Minerals, trees and crops, whether on, under or attached to land or not;
4. Gas and electricity;
5. Computer software;
6. Second-hand goods; and
7. Any component part of, or accessory to, goods.

Consumer goods are defined under the ACL as goods that are intended to be used, or are of a kind likely to be used, for personal, domestic or household use or consumption, and includes any such goods that have become fixtures since the time they were supplied if a recall notice has been issued or a voluntary recall has been initiated.⁴ 

Even if goods are not actually used for a personal, domestic or household purpose, if they are “of a kind likely to be used” for such purposes, they may still be caught by the definition. For example, treadmills and vehicle support stands may have a commercial application, but they are still considered a consumer good as they are also likely to be used for personal, domestic or household consumption.

Have you taken action to recall the goods?

The notification requirements under the ACL apply where a person has voluntarily “taken action” to recall consumer goods.⁵

A supplier will be deemed to have “taken action” to recall consumer goods if they have:

1. Made attempts to withdraw the products from the market or distribution chain;
2. Requested consumers return products for refund or repair, arranged replacement products;
3. Contacted consumers to arrange a service agent to attend their location to repair or modify the product; or
4. Made arrangements for a product to be repaired when it is next presented for a service.⁶

How to notify the ACCC of a voluntary recall

The ACL prescribes that the notice to the Commonwealth Minister must:⁷

1. State that the consumer goods are subject to recall;
2. If the consumer goods contain a defect or have a dangerous characteristic—set out the nature of that defect or characteristic;
3. If a reasonably foreseeable use or misuse of the consumer goods is dangerous—set out the circumstances of that use or misuse; and
4. If the consumer goods do not, or it is likely that they do not, comply with a safety standard for the goods that is in force—set out the nature of the non compliance or likely non compliance.

However, in practice, a recall notice is submitted via the online form on the ACCC’s product safety website and the online form requests much more information about the recall. For example, the form requests information about stock details, details of the proposed remedies for consumers and details about the communications campaign to notify consumers of the recall. The form also requests pictures of the product and supporting documents to be uploaded, such as the recall advertisement and the contact details of traders who sell the product.

What happens after you notify the ACCC of a voluntary recall

Suppliers are expected to communicate and work with the ACCC to effectively administer a product recall. This includes submitting a recall strategy to the ACCC which will outline steps to be taken to alert consumers of the recall. Suppliers are encouraged to communicate the recall through a medium which is best directed towards the particular consumer demographic; however suppliers must, at minimum, submit a written recall notice to be published on the ACCC’s product safety website. The ACCC also requires the supplier to provide progress reports of the recall at regular intervals. The timing of these reports will be determined by a report schedule, provided by the ACCC.

Once the supplier and the ACCC are satisfied that all reasonable steps have been taken to mitigate the risk posed by the consumer good, the supplier must submit a final report to the ACCC. This final report must include, among other things, confirmation and evidence of the total number of consumer goods supplied to, and recovered from, consumers.

Other notifications and reporting obligations

Overseas recipients of the goods

Where a voluntary recall has been initiated and the consumer goods have been supplied to people outside Australia, suppliers must give written notice to the persons to whom the relevant goods were supplied⁸ as soon as practicable after the supply of the consumer goods.⁹ The Supplier must also give a copy of the written notice to the Commonwealth Minister (via the ACCC) within 10 days after giving the notice.¹⁰

Mandatory reporting requirements where death, serious injury or illness has occurred

If, in trade or commerce, you supply consumer goods and you become aware of the death, serious injury or illness of any person and you:

1. consider that this incident was caused, or may have been caused, by the use or reasonably foreseeable misuse, of the consumer goods; or
2. become aware that a person other than you considers that the incident was caused, or may have been caused, by the use or reasonably foreseeable misuse, of the consumer goods,

you must provide written notice to the Commonwealth Minister within two days after the relevant incident.¹¹ 

Specific product requirements

In addition to the product safety provisions of the ACL, specific safety requirements and guidelines exist for certain types of products.

If, for example, goods are classified as therapeutic goods, the Therapeutic Goods Administration (TGA) should be notified¹² of the recall and safety requirements under the Therapeutic Goods Act 1989 may apply in addition to the requirements under the ACL. Suppliers should be aware of any obligations they have under product specific legislation.

Consequences of failing to comply with the mandatory reporting obligations

If a supplier fails to comply with the notification requirements under sections 128(2),128(6) or 132 of the ACL (i.e., fails to notify the ACCC of a recall in accordance with the ACL, fails to provide proof of written notice to overseas recipients of the consumer goods or fails to notify the Minister after a death, serious injury or illness which was or may have been caused by consumer goods), a pecuniary penalty may be imposed against the supplier. As at the date of this article, the maximum pecuniary penalty that may be imposed is up to $16,500 for a body corporate and $3,300 for individuals.¹³

Alternatively, a supplier may be found guilty of a criminal offence where they have contravened sections 128(2), 128(6) or section 132 of the ACL.¹⁴ As at the date of this article, the penalty for an offence is $16,650 for a body corporate and $3,330 for individuals. A supplier will not be subject to a pecuniary penalty where criminal proceedings have been initiated.¹⁵

Key takeaway for suppliers

If you are a supplier of consumer goods, it is best practice to develop a recall plan or policy which can be invoked in the event you need to initiate a voluntary recall. By being proactive, you will be able to promptly take action to recall a product that poses a safety risk and meet the requirements under the ACL, ultimately protecting consumers and your business.

This article was written by Teresa Torcasio Partner, Marian Ngo Senior Associate and Sarah Roberts Law Graduate.

Teresa Torcasio

P: +61 3 8644 3623

E: ttorcasio@hwle.com.au

¹Section 122(1)(b) of the  Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law).
² Section 128(2) of the Australian Consumer Law.
³ Section 2 of the Australian Consumer Law.
⁴ Section 2 of the Australian Consumer Law.
⁵ Section 128(1) of the Australian Consumer Law.
⁶ Section 2 of the ACCC’s Consumer Product Safety Recall Guidelines.
⁷ Section 128(7) of the Australian Consumer Law.
⁸ Section 128(4) of the Australian Consumer Law.
⁹ Section 128(5) of the Australian Consumer Law.
¹⁰Section 128(6) of the Australian Consumer Law.
¹¹Section 132(1) of the Australian Consumer Law.
¹²See the Consumer Product Safety Recall Guidelines.
¹³Section 224(3) of the Australian Consumer Law.
¹⁴Sections 201 and 202 of the Australian Consumer Law.
¹⁵Section 225 of the Australian Consumer Law.