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WEBINAR: Critical CPSC Recall Update PLUS 5 Things You Need to Know NOW PLUS 5 Things You Need to Know NOW to Avoid Product Safety Recalls, Fines to Avoid Product Safety Recalls, Fines and Collateral Brand Damage and Collateral Brand Damage Presenters: Matt Howsare and Matt Smith

Presenters Matt Howsare Matt Smith • • Mintz Levin partner Founder and chief strategist of ICIX • • Co-chair of Mintz Levin’s A recognized authority in supply chain risk Consumer Product Safety group. management and product safety • • Former Chief of Staff at the Champions industry-wide supply chain Consumer Product Safety Commission solutions

Agenda CPSC Update – Leadership Changes – What the CPSC announced last week – New requirements on recalls – General trends in fines and sanctions Tips for doing recalls right Avoiding recalls in the first place Legal considerations and pitfalls Technology & processes that help avoid recalls

“There’s a consensus that the way the CPSC does recalls is a little outdated in the era of Facebook and Instagram.”

CPSC Leadership Changes • President Trump nominated acting chair Ann Marie Buerkle to be the permanent chair • More changes are expected Ann Marie Buerkle

Why the CPSC is Exploring How to Improve Recall Effectiveness • Unanswered question: What is an effective recall? – Recall effectiveness metrics Matt Howsare • It isn’t good enough – Consumer return rates between 6% and 10% – ‘Recall fatigue’ appears to be a factor. • Technological advances – Social media – Apple Pay, Google Wallet, loyalty programs, apps • Ongoing issues & continuous improvement – Issues and effort to improve are not unique to CPSC

What changes in the recall process could companies see? • Large emphasis on direct notification Matt Howsare • Required use of social media if your company uses social media for marketing • More detailed data analytics reporting (email open rates, click rates, etc.) • Tiered recall system

The 3 most interesting things the CPSC said • Only 46% of cases reported to the CPSC Matt Howsare lead to a recall or recall alert • Recall alerts average a 50% consumer response rate – Recall alerts allowed where company has 95%+ customer contact information – Advantages to recall alerts • On premises retail recall posters may soon be extinct.

Death of the Recall Poster? “If a company uses social media to market its products, it must use at least two social media platforms for recall notifications.”

Assessment of current and future trends • How does the CPSC decide who should be fined? Matt Howsare • How high will fines go? • How might recalls change in the Trump administration?

Tips for doing recalls right • Honesty and Transparency • Effective Communication Matt Howsare – Clear and concise language – Joint press release with CPSC – Direct to Consumer Notifications – Company Website – Social Media • Remedy – Comprehensive and Easy

Avoiding recalls in the first place Critical to align your people and processes • Most important component: Matt Howsare – Train employees to send product safety information to the individual or team with responsibility and authority to act on it. • Other Considerations – Obtain genuine senior management buy in. – Train the team with responsibility for product safety on CPSC and Health Canada requirements. – Identify all potential inputs of product safety information. – Audit and test your program to identify weaknesses.

Avoiding recalls in the first place Technology you need to manage processes: • A comprehensive solution to give Matt Smith you transparency across your products and supply chain • Flexibility via configuration to accommodate process improvements • Enterprise-grade security and scalability • A strategic approach across operations

Leveraging Information To enable communications and help prevent recalls, you need: • Access to current information on Matt Smith your products and supply chain • To efficiently gather and distribute information to internal and external systems • A platform to analyze, predict and identify trends, and aid process improvements

Q&A

Thank you!