Will a Recall Protect Your Company?

by | May 10, 2022 | Business Litigation, Insurance Defense, Product Liability

The discovery of a dangerous defect in a product that has gone to market is a worst-case scenario for a company. Issuing a recall is one way to protect consumers and mitigate your legal risk. And while recalls won’t automatically prevent plaintiffs from filing lawsuits, they do reduce the chances your company will be sued.

Why Doesn’t a Recall Stop a Lawsuit?

Recalls may be issued after you discover a defect in a product you have already sold. Every moment a defective and potentially dangerous product is out in the marketplace, there is a greater chance an individual could be harmed. For example, if someone consumes a contaminated onion, that person could become extremely ill and seek to recover medical costs by filing a claim against the potentially responsible parties. Companies are also exposed to legal risk if they fail to issue proper warnings about the potential dangers of using its products.

What Does a Recall Do?

A recall is a good faith attempt to mitigate any harm caused by a defect in a product. An effectively issued recall vastly decreases the number of people exposed to the potential dangers of a product. Additionally, by ignoring a recall a consumer is responsible for putting him or herself at greater risk of injury, with less ability to recover losses related to any accidents that may occur.

In much the same way that warnings about inherently dangerous products can reduce a company’s liability for injuries, a recall provides similar protections. While getting the notice of a recall to the right people can be a challenge, that challenge becomes less significant as technology advances.

Is it Worth the Cost?

While the US does maintain strict standards for the need for recalls, only you and your management team can determine whether recalling a potentially dangerous product is worth the cost. And while mitigating legal risk is a key factor, business leaders should always take ethics into consideration when making these difficult decisions.