Blog

August 04, 2021

Hope Is Not a Strategy, Recalled Products Should Have One 

by Tal Bitton, VP Fraud & Risk

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It’s not every day that you make front headline news about your recalled products, but when it happens (and it can happen to anyone) it can be catastrophic.  

Last month, one of the world’s favorite marketplaces made headline news for having to remove “hundreds of thousands of hazardous products that it had distributed on its platform” according to CNBC. Headlines like this have been appearing more frequently in the last few months than ever, not to mention the increasing associated costs in lawsuits and fines. It’s not only getting more expensive for open marketplaces to conduct business with the risk of rogue sellers, but also the brand damaging negative press can be arguably more costly to consumer trust, loyalty, and ultimately revenue. 

Now the government has decided to intervene. Recent regulation efforts such as the Total Recall Act, the California Court of Appeals ruling, and last year’s Shop Safe Act has shifted the legacy mindset of the responsible party for the adverse product effects from the seller to the marketplace itself. Specifically, the Total Recall Act requires that marketplaces “spend a defined amount of money on publicizing the recall depending upon whether it is mandatory or voluntary.” This is a huge change in industry legislation focus, and if the Shop Safe Act or other regulation holding the marketplace accountable increases, so do the fines, the bad press, and lawsuits. This is a never-ending cycle, while marketplaces are taking the hit for recalled products as well as many other seller-induced headaches like fake Covid tests and narcotics sold on their site.  

Setting aside the increase regulation, and liability, the other major effect of those products are the health and confidence of the consumers themselves. With numerous reports of recalled safety products such as air bags, food, baby toys and seats, the consumer, is not only placed in danger, but also questioning the overall safety that these marketplaces are offering. The problem is worldwide. 

As platforms now become increasingly global as they grow into new geographies, so do the products the sellers offer to consumers, and as regulation from all over the world try to keep up, they often are at a disadvantage in the overall globalization and speed of e-commerce growth. 
 

The time is coming when marketplaces will be held responsible for these responsible. 

Recall products can be found in almost every industry today from skin care, baby toys, medications and to knock off airbags which deploy for no reason. deployThe cost of recall products is not simply a defective product that can be returned or exchanged, but rather, these products are responsible for homes burning down, children ingesting harmful products, health problems and lives lost.  Hazardous baby products, medical devices,  overheating wireless earbuds, all put consumers at risk.  

These products and many others have one thing in common: they need to be taken down immediately. A time delay can enable another purchase, and another life is at risk. 

Both managed e-commerce platforms and open marketplaces have more pressure from the government and consumers to regulate, mitigate, and ensure the safety of products offered on by their sellers. Given the risk that the Amazon’s, and Esty's of the world must carry with an open marketplace, it’s clear to see how it can get to be the Wild West quickly without a better integrated and automated recall system in place. A system that can not only detect but do so in a matter of seconds.  Any minute that a dangerous product is still present and offered to consumers, places lives and reputation at risk. 

How does your recall compliance compare? 

 

We’re here for you, we have experts in marketplace compliance and product-level risk assessment on hand. Let us help you build a better recall strategy and email me at talb@everc.com and I’m happy to help.