Are you thinking of selling a product or starting a product-based business? If so, must ensure you comply with product safety responsibilities. What does it mean for your product to be safe? What are the ways that small businesses can ensure that their products are safe? In this article, we cover some key things to know about your product safety responsibilities as a small business.
What’s a safety defect?
A product has a safety defect when its level of safety does not match what people are generally entitled to expect. However, this standard for the level of safety can change on a number of factors, including:
- The product’s marketed purpose
- The product packaging
- How the product is reasonably expected to be used
- How old the product is
Standards and bans for product safety
There are also voluntary and mandatory standards and bans that provide guides on the expected level of safety for certain products.
Experts create voluntary standards to resolve or prevent known safety issues with products. While these are not legally enforced, it can be better for brand reputation to follow these standards.
Mandatory standards are legal requirements for product safety. What mandatory standards apply to your products depend on what kind of products they are. To ensure that your products abide by mandatory standards, it’s best to consult a lawyer and check the ACCC’s list of mandatory standards.
Similarly, there are products that are banned for sale in Australia. Check out the ACCC’s list of banned products to learn more.
What happens if a business doesn’t meet its product safety responsibilities?
If a customer buys a product that doesn’t meet the generally expected level of safety, they may seek a refund, repair or replacement per their consumer rights and guarantees. Consumers guarantees confer a range of rights on consumers, including the right to expect that products they buy are:
- Fit for purpose
- Of an acceptable quality
- Matches the product description, etc.
Read more about consumer guarantees in our article here.
Liability can also fall differently depending on your situation. For example:
- The unsafe product causes loss or damage. You may have to compensate the consumer for the loss.
- You source your products from a manufacturer, and there are manufacturing defects. The manufacturer may be liable, depending on the scenario.
- The consumer asks for a refund or replacement for products with manufacturing defects. While you still have to honour those consumer guarantees, the manufacturer may compensate you for the cost of refunding or replacing the product.
- The manufacturing defect caused loss or damage. The manufacturer may also be liable to pay the consumer’s compensation for that loss or damage. For example, let’s say you sell packaged, gluten-free biscuits that you source from a separate baker. However, a batch of biscuits was contaminated during baking, and caused a customer to have an allergic reaction. Here, the original baker may be liable to pay the compensation.
Recalling an unsafe product
If you discover a safety issue with a product, you should recall it. This includes when it may cause injury to someone, or it does not comply with mandatory safety standards or bans.
You might find out about safety issues from a number of sources, including your customers, your manufacturers, government agencies, etc. It is best to remain proactive about potential safety issues. For example, if there are recalls overseas that are related to your product or your manufacturer.
If you recall a product for its safety issues, you must notify the ACCC within two days of starting the recall.
Consequences
It’s crucial to pay attention to product safety, mandatory standards, bans, and recall notice requirements. They not only protect your community and customers, they also protect your brand and business from legal liability. Failure to comply could result in legal liability to customers, increased costs associated with providing replacements, refunds and compensation to customers, redesign costs, fines, or even imprisonment.
Tips to prevent defects
Fulfilling your product safety responsibilities is easiest when you have clear procedures to follow when developing and selling your product. A few steps to take may include:
- Checking mandatory standards and banned products.
- Routine quality and product testing
- Keeping up to date about product safety news and recalls
- Get the National Association of Testing Authorities to test your products against safety criteria
What Next?
Fulfilling product safety obligations as a small business can be daunting, especially with so many things to consider at once. A lawyer can help you navigate mandatory standards, bans, recalls, manufacturer contracts and customer-facing policies to ensure that your products are safe and your business runs smoothly.
For help with your product safety responsibilities, contact us for a free, no-obligation chat.
