US Product Liability in Practice: CPSC, Certificates and Recalls

American product liability comes with plenty of stories: juries, class actions, punitive damages in the millions. The legal foundations (warranty, negligence and strict liability), the process with discovery and a jury, and the question of the right structure are covered in our overview Product liability in the USA. This guide starts one step earlier, with the duties you have before anyone sues.

Most liability cases don't start in court. They start in the warehouse, at customs or with a complaint. Who counts as the manufacturer, which certificates a product needs, when you must notify the Consumer Product Safety Commission, how a recall works and where the states differ: these are the questions of everyday compliance. All information comes from federal statutes and agency regulations and from the laws of Texas and Florida.

1Who counts as a manufacturer in the USA

The US product safety law, the Consumer Product Safety Act, defines the manufacturer briefly in 15 U.S.C. 2052: a manufacturer is anyone who manufactures or imports a consumer product. For a European company that ships its goods to the USA itself, or for its US subsidiary acting as importer, this means they carry the manufacturer's duties, even if production takes place in Europe.

For certificates, responsibility is spelled out explicitly. Under 16 CFR 1110.7, the importer must issue the certificate for a product made abroad, and the manufacturer for a product made in the USA. That is one reason the choice of importer is a structural question: whoever acts as importer of record takes on the duties and the responsibility.

State liability law builds on these roles too. Texas, for example, distinguishes in Chapter 82 of its Civil Practice and Remedies Code between the manufacturer, who designs, makes or places a product into the stream of commerce, and the seller, who distributes it commercially, and it requires the manufacturer to indemnify the seller against losses from product liability suits. If you sell through dealers in Texas, expect claims from them whenever one of them gets sued.

2Certificates instead of the CE mark

In Europe, the manufacturer declares conformity and affixes the CE mark. The USA has no equivalent that covers all products. Instead, different agencies require their own proof depending on the product, and none of these rules mentions the CE mark. The work behind CE conformity (risk assessment, test reports and technical documentation) is still not wasted; it is often the foundation the US proof is built on.

For consumer products subject to a mandatory CPSC safety rule, 16 CFR 1110.5 requires every shipment to be accompanied by a certificate. The rule has two types: the General Certificate of Conformity for general products and the Children's Product Certificate for children's products. Children's products subject to a safety rule must, under 15 U.S.C. 2063(a)(2), be tested before import or distribution by a laboratory whose accreditation the CPSC has accepted. Under 16 CFR 1110.9, the certificate must be issued in English.

For imports, paper in the box isn't enough. Under 16 CFR 1110.13, the issuer must file the certificate data electronically in the customs system with the entry; for mail shipments, the data is filed in the CPSC Product Registry before arrival. On request from the CPSC or customs, the certificate must be produced within 24 hours. Under 16 CFR 1110.17, certificates and test results must be kept for at least five years.

3Machinery, electrical, radio and labels

Many European manufacturers don't supply consumer products but machinery and equipment. For them, the workplace safety agency OSHA often matters more than the CPSC. Under 29 CFR 1910.303(a), electrical conductors and equipment in the workplace are only acceptable if they are approved. Under the definition in 29 CFR 1910.399, that usually means a Nationally Recognized Testing Laboratory, a test lab recognized by OSHA, has tested, certified or listed them. Your American customer will therefore ask for that listing before connecting a machine on their shop floor.

If you sell devices that use radio frequencies, 47 CFR 2,803 requires authorization from the Federal Communications Commission before marketing. Marketing includes selling, offering, advertising and even importing for sale. The rule explicitly covers listing on an online marketplace combined with storage, shipping or billing.

Two rules affect almost every product. Under 19 U.S.C. 1304, every article of foreign origin must be marked as conspicuously, legibly and permanently as possible with the English name of its country of origin, such as "Sweden", "Norway" or "Netherlands". And if you ship to California, Proposition 65 requires a clear and reasonable warning about chemicals on the state's list; according to the responsible agency, OEHHA, the duty applies to businesses with ten or more employees. The table sums up the key rules. What customs requires on import is covered in the guide Exporting to the USA: tariffs, origin, customs clearance.

4The Section 15(b) reporting duty

The most important duty European manufacturers underestimate is in 15 U.S.C. 2064(b), known as Section 15(b). Every manufacturer, distributor and retailer of a consumer product must notify the CPSC immediately once it obtains information that reasonably supports the conclusion that the product fails to comply with a mandatory safety rule or a standard the CPSC relies on, violates another CPSC rule, contains a defect that could create a substantial product hazard, or creates an unreasonable risk of serious injury or death. The duty only falls away if you know for certain that the CPSC has already been adequately informed.

What "immediately" means is set out in 16 CFR 1115.14: within 24 hours of the company obtaining the relevant information. For its own investigation, the rule allows a prompt review that should generally not exceed ten days; after ten days, the CPSC treats a company as knowing everything a diligent review would have revealed. In practice, complaints, warranty claims and incident reports from the USA must reach someone who evaluates them right away, not at the next quarterly meeting.

There is also a reporting duty for lawsuits. Under 15 U.S.C. 2084, the manufacturer must report to the CPSC if a particular model was the subject of at least three civil actions over death or serious bodily injury within one of the statutory 24-month periods, each ending in a settlement or a judgment for the plaintiff. The report is due within 30 days of the third settlement or judgment.

5What a violation can cost

Anyone who knowingly violates the duties under the Act, for example by failing to report or by importing an uncertified product, risks a civil penalty under 15 U.S.C. 2069. The statute sets maximums of $100,000 per violation and $15,000,000 for a related series of violations, and each affected product can count as a separate violation. The CPSC adjusts these amounts for inflation every five years. Since January 1, 2022, they stand at $120,000 per violation and $17,150,000 for a series.

The penalty isn't the only risk. A missed report can play a role in a later liability trial, and a product stuck at the border without a certificate never reaches the market. Taking the reporting duties seriously protects you not just from fines but also protects your supply chain.

For your organization, that means: decide who takes in complaints in the USA and at home, who makes the Section 15(b) assessment and who talks to the CPSC. Keep certificates, test reports, serial numbers and shipping lists organized so you can tell within a day which products were sold where.

6Recalls: how they work with the CPSC

A recall in the US is almost always voluntary, but it is never informal. Under 16 CFR 1115.20, the CPSC agrees a corrective action plan with the company. The plan describes the hazard and the defect, how the public will be informed, which models are affected, guidance for the period until the remedy is in place, and the remedy itself: a refund, a replacement or a repair. The plan is not legally binding, and the CPSC reserves the right to take further action. If no voluntary solution is reached, the agency can order measures under 15 U.S.C. 2064(c), such as a stop to distribution and notice to the public.

The CPSC's Fast Track program is quicker. According to the agency, it requires a complete report and an acceptable plan that can be implemented within 20 working days. That includes a joint press release with the CPSC, a poster at the point of sale, a CPSC-approved plan for taking the goods back, a notice on the homepage of your website, letters to the distribution chain, social media posts modeled on the press release and a remedy approved by the CPSC.

If recalled goods, or goods returned by customers, are exported again, the importer can recover part of the duties paid. Customs law covers this: under 19 U.S.C. 1313(c), there is a duty refund, called drawback, for defective goods or goods returned at retail that are exported or destroyed under customs supervision within five years of import.

7The states: strict liability, but not the same everywhere

In the US, civil product liability is a matter for the states. Each state decides through its statutes and its courts whether, and how far, a manufacturer is liable without fault. The differences lie less in the principle than in the details: how long after the sale a claim can still be brought, how high punitive damages may go and how the loss is split between manufacturer, seller and injured party.

Texas and Florida show the range. In Texas, under § 16,012 of the Civil Practice and Remedies Code, a product liability claim must generally be brought within 15 years of the sale by the defendant, or longer if the manufacturer gives a written promise of a longer safe useful life. Under § 41,008, punitive damages are capped at the greater of twice the economic damages plus noneconomic damages up to $750,000, or $200,000, with exceptions for certain crimes. In Florida, § 95,031 sets a twelve-year statute of repose from delivery to the first buyer for products with an expected useful life of ten years or less, which under the statute means every product for which nothing else is promised. Under § 768.73, punitive damages are generally capped at three times the compensatory damages or $500,000.

That does not automatically mean a company should choose its location based on liability law. Your location alone does not decide which law applies in a dispute; if you ship to many states, you deal with the rules of many states. What matters more is that your useful-life statements, warranties and warnings fit the rules of the states you ship to. For how the states compare as a business location, see the guide Choosing a location and incentive programs.

8Product liability insurance as a category of its own

Whether your general liability policy from home covers damage in the US is set out in its terms, not in the name of the policy. For your US business, product liability insurance is therefore a separate decision you make with your insurer or broker before the first shipment leaves the warehouse. Limits and premiums depend so heavily on the product, revenue and claims history that a figure here would not help.

Above all, check five points. First, territorial scope: are shipments to the US and lawsuits in US courts expressly included? Second, defense costs: do attorney and court costs count toward the limit, or are they paid on top? Third, coverage for retailers and marketplaces, which often require you to name them as additional insureds. Fourth, recall costs, which many policies do not cover and which may need separate insurance. Fifth, the trigger: does coverage depend on when the damage occurred or when the claim was made, and what applies after the policy ends?

Punitive damages are a special case you should look for specifically in the terms. Whether they are covered or not, the best protection remains the duties in the previous sections: if you keep certificates, warnings and reports in order, you give plaintiffs less material for a claim of gross recklessness.

9Checklist before your first shipment

• Who is the importer, and therefore who issues the certificates?
• Is your product subject to a mandatory CPSC rule, and do you need a GCC or, for a children's product, a CPC based on lab testing?
• Do you need an NRTL listing for electrical products or FCC authorization for radio devices?
• Does every product carry the English name of its country of origin, and do the warnings and instructions fit the states you ship to, including California?
• Who assesses complaints from the US within 24 hours under Section 15(b), and who talks to the CPSC?
• Can you tell within a day which serial numbers went to which customers?
• Does your insurance cover shipments to the US, defense costs, retailers and recalls?

The structure behind these duties, meaning whether a subsidiary imports or the parent company does it itself, is something you decide with the guide Branch or subsidiary. For an overview of every step, see Expanding successfully into the USA.

In short

• Whoever imports a product into the US counts as the manufacturer under US product safety law and issues the certificate for regulated products themselves.
• The CE mark does not replace any US certificate; depending on the product, the CPSC, OSHA, the FCC and individual states require their own proof.
• Manufacturers, distributors and retailers must inform the CPSC immediately, meaning within 24 hours, when there are signs of a defect or a serious hazard; penalties reach $17,150,000 for a related series of violations.
• Recalls run through a plan agreed with the CPSC; under Fast Track it must be workable within 20 working days.
• Each state sets its own liability periods and punitive damages rules, for example Texas and Florida with statutes of repose of 15 and 12 years.

How we help you

• US market entrySubsidiary, staff, taxes: your start in the US market.
• Form a CorporationThe US corporation (Inc) for growth, investors and your visa.
• Tax structureA clean structure between parent company and US subsidiary, or between you and your US company, coordinated with your accountant.
• Company formation consultationEntity type, state and tax consequences, before you commit.