You may have read earlier this week about the settlement between the Consumer Product Safety Commission and the founder of Buckyballs. The founder of the product made with rare earth magnets, Craig Zucker, agreed to a product recall he had long fought, and a settlement for a fraction of the $57 Million the government was suing him for.
We have written on a couple of occasions in this space about the nuances of this case. There are still remaining questions, even with the settlement, about whether or not the CPSC ever had jurisdiction, and the possibility that the unprecedented lawsuit against an individual by the staff of the CPSC was a significant overreach of authority.
Former CPSC Commissioner Nancy Nord, a frequent critic of her former employer since her departure, penned an interesting article in which she suggests the $375,000 settlement was a “price for peace.” Ms. Nord also does a great job of detailing the winners in this case: there were none.
The $375,000 from Mr. Zucker will be placed in escrow to fill a trust fund for the recall, and that, in addition to what has to have been large legal fees, is the extent of his punishment. Significantly less than the $57 Million the government was shooting for, so not a win for either party. There is little clarity on whether or not the product was ACTUALLY defective (not a single injury from the intended product usage group). The reality that the products will likely not be returned according to the recall, and the money spent by the government entity means that consumers are no safer, and tax dollars were spent as if there were plenty of resources available, means the general public took a loss, too.
But what should be the chilling effect to the promotional products industry is that this was not a product from a “YOYO Vendor.” That was what one distributor characterized for me in my end-user client days as the risk of sourcing from untrusted sources; “You’re On Your Own.” Buckyballs had previously worked with the CPSC to design warning labels, customize their distribution channels AWAY from strictly toy stores, and even created informational videos and a website about Buckyballs’ risks. They were anything but a YOYO vendor. But, despite best efforts to identify the intended use, properly warn and inform, injuries outside the intended usage group brought it all down around Mr. Zucker and Buckyballs. When it comes to sourcing of safe products, traditional risk analysis may simply not be enough.
How about you? Have you had an instance where, despite your best efforts at responsible sourcing, you ended up with more risk than you bargained for?
