CPSC Issues New Repurchase Regulations--Effective March 6, 1974

The Commission's decision will provide--for the first time-- the mechanism for removing banned products from the hands of consumers, retailers, and distributors, while at the same time providing for the full refund of purchase price to consumers.



As specified in the Hazardous Substances Act, a purchaser is entitled to a refund only from the party who sold him the item. Thus, if the consumer cannot provide "proof of purchase," from a dealer or retailer, manufacturers are encouraged but not required to give refunds directly to consumers.



Under the new repurchase regulations, which take effect March 6, 1974, the manufacturer of banned products must notify wholesalers and/or retailers whenever one of his products has been banned. He must identify the product, state the nature of the hazard that caused it to be banned, and provide instructions for return or destruction of that product.



Upon notification by a manufacturer or wholesaler that a product has been banned, the retailer is required to notify consumer-purchasers of this fact by prominently displaying signs in his business establishment entitled "Banned Articles or Substances." The list-- to be posted for 120 days--must contain identification of banned products.



The identification must include:

 

- the model number or other distinguishing characteristics of the product

- the date notice was received from the manufacturer or distributor

- the nature of the hazard involved with the use of the product.

In addition, the regulations require notice to consumers of refund procedures. For retailers, this may be accomplished simply by attaching a notice explaining these procedures to the list of "Banned Articles or Substances" already posted in stores.



The provision entitles consumers to receive a "full refund" of the price paid for the product plus any "reasonable and necessary transportation charges incurred in the return of the product."



Retailers and wholesalers will be entitled to a refund of the price they paid to the manufacturer for the product. The Commission's new regulations provide that private labelers and importers will be treated the same as "manufacturers" in terms of their responsibilities under the repurchase regulations.



Failure to comply with the regulations may result in a court injunction to force compliance, the Commission said.



In issuing the new regulations, the Commission rejected several proposed changes, one of which would have substituted "repair or replacement" for refund, at the manufacturer's option.



The Commission rejected the suggested change "on grounds that it would interfere with the purpose of the regulation to provide for swift removal of banned products or substances from households and from channels of interstate commerce."

 

Statements By Commissioners Newman And Pittle

In commenting on the new regulations, Commissioner Newman said, "I view the repurchase regulations as protecting consumers in two ways. First, the regulations discourage manufacturers from manufacturing unsafe products to begin with. Second, they will also ensure that when consumers do buy unsafe products that are later banned, the consumers' money will be refunded."



"Too often consumers get stuck with unsafe products and have little or no recourse. Our refund provision is a dramatic step toward increasing fairness to the consumer," declared Commissioner R. David Pittle.