Product Recall

A product recall is a request to return a product after the discovery of safety issues or product defects that might endanger the consumer or put the maker/seller at risk of legal action.

The recall is an effort to limit ruination of the corporate image and limit liability for corporate negligence, which can cause significant legal costs. It can be difficult, if not impossible, to determine how costly can be releasing to the consumer a product that could endanger someone's life and the economic loss resulting from unwanted publicity. Recalls are costly. Costs include having to handle the recalled product, replacing it and possibly being held financially responsible for the consequences of the recalled product.

A country's consumer protection laws will have specific requirements in regard to product recalls. Such regulations may include how much of the cost the maker will have to bear, situations in which a recall is compulsory (usually because the risk is big enough), or penalties for failure to recall. The firm may also initiate a recall voluntarily, perhaps subject to the same regulations as if the recall were compulsory.

A product recall usually involves the following steps, which may differ according to local laws:

In general, the number of recalls has been increasing - with an exception during the economic crisis 2009-2010 – due to time, cost and market pressure. Per year, global automotive warranties are estimated as USD 40 billion, 3–5% loss in sales. Low priced production often leads to minor quality, and outsourcing leads to a shift of knowledge concerning techniques and processes. This way, technical failures are more likely to occur due to communication problems between the different parties engaged in the supply chain and missing definitions for technical interfaces. Despite the increasing number of recalls, a Mojo Motors, Inc. study found only .005 percent of customers ask about recalls when contacting dealerships.

Manufacturers have to notify the owner when there’s a recall notice, but in the case of a second, third or fourth owner of the car, the company may be sending the notice to a previous one.

Every year, there are several pet food and treat recalls due to spoiled or tainted ingredients. Perhaps the most known was in 2007. The 2007 pet food recalls involved the massive recall of many brands of cat and dog foods beginning in March 2007. The recalls came in response to reports of renal failure in pets consuming mostly wet pet foods made with wheat gluten from a single Chinese company, beginning in February 2007. The recall began voluntarily with the Canadian company Menu Foods on March 16, 2007, when a company test showed sickness and death in some of the test animals. Overall, several major companies have recalled 150 different brands of food comprising more than 5,000 separate pet food products. The FDA and USDA investigation found the food to be intentionally contaminated with the chemical melamine.

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