Product safety has always been an important aspect of the fashion industry and it affects everyone in the supply chain, from manufacturers through to retailers. In a previous edition of Ragtrader, I discussed the new Australian Consumer Law (ACL) as it relates to consumer guarantees. In this article I will discuss the new product safety laws under the ACL which came into effect this year.
Overview of the new national product safety laws
The new laws apply to all businesses across Australia uniformly. All suppliers in the supply chain – including manufacturers, wholesalers, hirers and retailers – are obliged to keep up to date and comply with the new product safety laws. The ACL sets out the responsibilities of the government and businesses in relation to the product safety laws. In sum, the ACL empowers the government to regulate the products on the market to ensure consumer safety. In particular:
• if a product is suspected of being unsafe, a safety warning notice may be issued and an investigation may be conducted into the safety of the product
• depending on the outcome of the investigation, the government may ban the product, impose mandatory safety standards or recall of the product
Your obligations regarding safety warning notices
The purpose of a safety warning notice is to alert the public that a product may be unsafe or hazardous. A safety warning notice will typically be issued by the government when it becomes aware that a product may cause injury or is under investigation. If a safety warning notice is issued in relation to a product you sell, you do not have to stop selling the product but you do have to respond to the safety notice. This is because the purpose of the safety notice is simply to alert the public as to the potentially hazardous nature of the product. However, you will need to keep informed about the status of the investigation. If the investigation indicates the product is unsafe, the government may ban the product or issue a product recall and both of these mechanisms will likely influence your business.
Once the government has investigated the product, further action may be taken to protect the public if the outcome of the investigation reveals the product is unsafe. Such action may include banning the product, recalling the product and imposing mandatory safety standards. Each of these actions is discussed further below.
Your obligations regarding bans on consumer goods
If a product is unsafe, the government may ban the product from the marketplace. A ban means it is unlawful for anyone to supply, manufacture, possess or have control of the product. There are two types of bans: a temporary ban that lasts for 60 days (and can be extended for up to another 60 days), and a permanent ban which lasts indefinitely. If the government imposes a ban on a product, it must issue a ‘ban notice’ and publish it on the internet.
As a supplier, you are responsible for ensuring your products do not breach any bans. This means that you should be aware of any current product bans or investigations and how to comply with them. In order to keep up to date, I recommend subscribing to updates from the Product Safety Australia website (visit productsafety.gov.au) and following product safety at the ACCC on Twitter (visit @ProductSafetyAU). If you realise you have supplied goods in breach of a ban, you should immediately seek expert legal advice.
Your obligations regarding product recalls
If a product is unsafe, the government may recall the product from the marketplace and the purpose of a recall is to remove unsafe products from circulation. A recall can be initiated by a business or ordered by the government but the majority of Australian recalls are initiated by businesses who are concerned that their products are either unsafe, do not comply with a safety standard or are banned product. When the government decides to recall a product, it must notify the relevant supplier by issuing a ‘proposed recall notice’ on the internet. The action the business owner is required to take will very much depend on the circumstances (for example, what the safety issue is, how far the product has been distributed, etc) but it will require the supplier to replace, refund or repair the goods at the supplier’s cost. As the supplier, you’re responsible for ensuring any products you sell aren’t the subject of a recall. In order to keep up to date, I recommend subscribing to email alerts on the product recall website (visit recalls.gov.au).
Your obligations regarding mandatory safety standards
Mandatory standards are exactly that – a standard that must be complied with in order for your products to meet the legal requirements necessary to be sold in the Australian marketplace. In relation to clothing and accessories, it’s safe to say that most products are safe when worn and cared for in the usual manner for the particular type of product. But mandatory standards have been created where a risk of serious injury or illness has arisen in relation to a certain type of product.
A mandatory safety standard can set requirements relating to the product, including:
• the way the product is made
• how the product works,
• any pre-market tests it needs to pass before it can be sold and warnings to accompany the product.
In particular, there are mandatory standards in relation to the following types of products relevant to designers: labelling for clothing, nightwear for children and sunglasses. If you are in the business of producing or supplying the above types of products, you should be aware, in detail, of the mandatory standards that apply to the product. Whilst the mandatory standard documents are publicly available, a small fee is required to obtain a copy of the standard. The standards can be purchased from SAI Global (visit saiglobal.com).
Consequences for non-compliance
If you don’t comply with the new product safety laws, you risk legal action being taken against you under the Competition and Consumer Act 2010 (Cth) (formerly known as the Trade Practices Act 1974 (Cth)). Depending on the circumstances, a breach may attract civil or criminal prosecution and fines can be up to $1.1 million. So it’s in your best interests to be intimately aware of your obligations under the new safety laws. Additionally, as some of the government notices must be published online, public exposure to defective products will be increased. Therefore, there are good commercial reasons why you should be aware of your obligations under the new safety laws, not the least of which is the bad publicity that may be associated with your brand as a result of a defective product.