Late last week, the CPSC Office of Compliance and Field Operations issued a letter on the CPSC website to “Manufacturers, Importers, and Retailers of Self-Balancing Scooters” that ultimately makes a new voluntary safety standard for self-balancing scooters, typically called “hoverboards,” mandatory.

The “voluntary” standard

On February 2, 2016, UL issued its standard, UL 2272 – Outline of Investigation for Electrical Systems for Self-balancing Scooters, which covers the electric drive train, including the rechargeable battery and charger system. This standard complements UN/DOT 38.3 test requirements for lithium ion batteries.

CPSC’s Letter

CPSC’s letter states that hoverboards

that do not meet these voluntary safety standards pose an unreasonable risk of fire to consumers. Consumers risk serious injury or death if their [hoverboards] ignite and burn….

The CPSC Office of Compliance and Field Operations staff considers [hoverboards] that do not meet the safety standards … to be defective, and that they may present a substantial product hazard under … the CPSA [Consumer Product Safety Act].

As a result, the Office of Compliance may detain or seize hoverboards at the port of entry, and may seek recalls of products already offered for sale or sold in the United States.

Most importantly, the letter reminds industry that Section 15(b) of the CPSA places a duty to report (within 24 hours) on all members of the supply chain if they obtain “information that reasonably supports the conclusion that a product distributed in commerce contains a defect that could create a substantial product hazard or that the product creates an unreasonable risk of serious injury or death….”

Failure to report, or report on time, can lead to criminal penalties or civil penalties of up to $100,000 per violation, capped at $15 million for a related series of violation.

Flashback to drawstrings

This language is substantially similar to the language in CPSC’s 2006 open letter to industry regarding compliance with the then-voluntary drawstrings standard. Following that letter, CPSC began an enforcement campaign against suppliers and retailers of children’s upper outerwear with drawstrings resulting in numerous settlements resolving CPSC’s allegations of failure to report. The result was that apparel retailers incorporated the voluntary standard into their compliance protocols, drawing no distinction between the voluntary standard and other required specifications.

History is likely repeating itself here, as much like the drawstrings issue, retailers of hoverboards can verify whether a hoverboard meets the standards. CPSC Chairman Kaye commented that this letter is CPSC “drawing a line in the sand and a notice for the entire hoverboard community…. From our perspective, a smart retailer will put in place a stop sale to find out if their inventory complies with the UL standard. If they are certain that it doesn’t, they should then issue a recall proposal.”

Section 15(b) failure to report claims are likely the easiest way for the Commission to penalize a company in connection with the product. Claims only require a showing that a company obtained information triggering a report and did not do so within 24 hours – there is no requirement that a product actually result in an injury. CPSC has employed Section 15(b) enforcement consistently as a tool to punish companies and send deterrent messages to the consumer products industry.