Product Recall Units Hit Record Levels in 2022
The number of recalled product units rose to record levels in 2022 (23.4% higher than the previous record set in 2018), and all signs point to “more aggressive and public” regulatory enforcement on product safety in 2023, according to Sedgwick’s latest “State of the Nation” recall index report.
“Regulators have now fully returned to pre-pandemic levels of activity and are making up for lost time with a steady slate of long-awaited guidelines and modernizations to existing regulations,” said Chris Harvey, Sedgwick’s senior vice president of brand protection. “Businesses will face the tough challenge of remaining agile with their operations to accommodate new regulations, while simultaneously anticipating and preparing for potential economic and geopolitical issues.”
Sedgwick experts predicted no shortage of enforcement from the Federal Trade Commission (FTC) and the Consumer Products Safety Commission (CPSC) in 2023 after signaling their intentions with “attention-grabbing press releases” and fines in 2022.
“Having regulators step up monitoring and enforcement raises risks for companies from legal, compliance and reputational perspectives,” Sedgwick said in its report. For example, the CPSC levied about $38 million in fines in 2022—including a $19 million fine against Peloton—after no fines in 2019 and 2020 and just $7.95 million in 2021.
For its 2022 index, Sedgwick tracked 1.48 billion product unit recalls in 2,938 events across five sectors: Automotive, consumer products, food and drink, pharmaceuticals and medical devices. In addition to breaking the 2018 record, product recalls eclipsed the 2021 numbers by over 46%.
Recalls in the food and pharmaceutical sectors drove the spike in 2022, reaching six-year highs for both recall number and size, Sedgwick experts said in a webinar.
The food and drink sector saw 423 recalls in 2022, up from 414 in 2021, but the number of units recalled soared by over 700% to 416.9 million from 52.1 million. While contaminated baby formula recalls grabbed headlines in 2022, undeclared allergens like nuts and milk topped the list for the cause of recalls for the last five years.
In 2023, the Food and Drug Administration (FDA) will have the Food Allergy Safety, Treatment, Education and Research (FASTER) Act in its arsenal. The FASTER Act went into effect on Jan. 1, 2023, and mandates stricter food labeling, preventive controls and sanitation practices to prevent cross-contamination. The measure also adds sesame to the list of common food allergens that must be included on labels.
Sedgwick tracked a 32.5% rise in recall events in the pharmaceutical sphere—up to 363 in 2022 from 274 one year earlier. Recalled units hit a 15-year high at 567.4 million—a 114% rise over 2021.
New legislation in 2023 will also affect pharma firms. The Consolidated Appropriations Act (CAA), signed into law in December 2022, imposes new obligations on manufacturers for drug marketing and clinical trials. The FTC has also updated its guidelines for claims made by health product manufacturers to rein in “misleading” marketing.
In the automotive sector, recall events dropped to 955 in 2022 from 1,093 in 2021, with the “airbag bubble” seemingly over, per Harvey. However, cybersecurity for “smart” vehicles and safety issues for semi-autonomous and electric vehicles have caught the attention of state and federal regulators.
Much like automotive products, medical devices will face evolving cybersecurity risks and greater scrutiny in 2023. The CAA contains mandates for medical device manufacturers to detail to the FDA how they plan to monitor, identify and address cybersecurity vulnerabilities in their products.
In 2022, the sector accounted for 911 recalls (up from 837 in 2021), and while recall events increased, the number of units recalled dropped 27.2% to 438.4 million. Mislabeling was the leading cause of recalls, Sedgwick said.
Consumer product recall events jumped to 286 in 2022 from 218 in 2021—a 31.2% increase and a six-year high. However, the number of units recalled dropped by nearly 50% to 23.4 million. Sedgwick reported that sports and recreation products led the sector, followed by electronics.
In 2023, Sedgwick predicted a heightened focus on lithium battery safety, “green” marketing claims, and the presence of perfluoroalkyl and polyfluoroalkyl substances (PFAS) in consumer products.
“Consumers seem to be weighing the environmental impact of a product more heavily when they make purchasing decisions. In response, the [FTC] is trying to make sure the information they have is accurate and truthful,” said Sedgwick.
According to the report, organizations claiming to be “green” or “organic” could also see class-action litigation over these claims, particularly if their products contain PFAS. During the webinar, Harvey cited PFAS as one of the hottest topics for 2023, a risk that will affect many different industries and one that emphasizes that “the manufacturer’s responsibilities don’t end once the product is sold.”
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