Canada's Consumer Product Safety Act came into effect in June, giving Health Canada more authority to monitor and deal with unsafe products on the Canadian market. The Act is meant to keep Canadian consumers safe, but it has big ramifications for any companies manufacturing, importing or selling products in this country.
Under previous legislation, Health Canada could request that manufacturers recall unsafe products, but could not demand it. That changed when the CPSA went into effect.
The act is of considerable importance to small business owners, because a recall could result in immense financial damage. Once a product is recalled, for example, a company could lose the money spent to purchase the product. The business could also be on the hook for the costs of fixing or disposing of the unsafe product.
Canadian businesses producing or selling products affected by a recall can also face financial penalties if they fail to comply with Health Canada's directives.
Which businesses are covered under the act?
Essentially, any business that manufactures, imports, sells, advertises, tests or packages a consumer product falls under the powers of the Consumer Product Safety Act. Health Canada's definition of a consumer product is anything "that may reasonably be expected to be obtained by an individual to be used for non-commercial purposes."
Product lines to pay close attention to regarding safety include sports equipment, baby accessories, home insulation and household cleaning products.
What products are prohibited by the act?
Health Canada has outlined several categories of prohibited products that cannot be sold in Canada:
- Prohibited products: These are specific products listed in Schedule 2 of the act which are prohibited outright. Examples include baby bottles that leach bisphenol A, jequirity beans, lawn darts, and baby walkers.
- Products not compliant with regulations: Health Canada has a series of regulations covering products such as candles, baby clothes, window coverings, hockey helmets and kids' toys. As a small-business owner, you need to be familiar with these regulations if you plan to import, manufacture or sell any of these products.
- Products that pose a threat to human safety
- Products involved in a recall
- Products that have been designated faulty and need correction
- Products that are mislabeled
It is an offence under the act for a company to fail to report of any of these products to Health Canada. The onus is on businesses to be aware of things like recalls, and they need to be vigilant to ensure they are not involved with selling any prohibited products.
What precautions should be taken to avoid prohibited products?
Even though the scope of the Act may appear to be daunting, most problems can be avoided simply by being aware of all the products a company imports or sells to the public and checking them against Health Canada advisories. It is not an excuse for a company to say it didn't know a product was not approved for sale in Canada.
In addition, Health Canada has outlined several requirements in the Act to help protect businesses.
First and foremost, be sure you keep accurate records pertaining to where and when each item in your inventory was obtained. These documents must include from whom you bought the product and the party you sold it to. You must keep these documents for six years unless Health Canada gives you special permission otherwise.
Health Canada may also ask a company to submit inventory for various safety tests to ensure compliance with the Act. Although these tests may seem invasive, they are meant to protect businesses from potential liability as much as they are to protect the public. If a product does not pass, you will be given the chance to bring the product into compliance with Health Canada's regulations, if at all possible.
If a product is deemed to be unsafe in any way, Health Canada may issue a directive to fix the it. If a company chooses not to fix the product, they must stop selling it. If a company ignores a directive, Health Canada has the power under the Act to force the business to take corrective measures and foot the bill for it.
In the event Health Canada issues a mandatory recall, a business can ask for a review of the decision but must cease selling the product until the review is completed.
How is a product recalled?
A manufacturer can voluntarily recall a faulty or unsafe product at any time. Under the new Consumer Product Safety Act, though, Health Canada can issue a recall of its own should the manufacturer not react in a timely fashion.
If a business is selling or importing a recalled product, it must refrain from doing so immediately once an official recall notice is issued.
Which products are not covered under the Act?
Items such as drugs, alcohol, weapons, food and cars are not covered by the Canada Consumer Protection Act. They are dealt with under separate legislation.
What happens if a recall is ignored?
Should a company ignore a recall notice from Health Canada, it may be ordered to take action at its own expense. If no action is taken, Health Canada will impose a fine, usually lower than what a company might incur should the matter go to court. Health Canada also has the right to make information about the fine public in order to encourage other companies to fall in line.
As a last resort, Health Canada can take a company to court, which would mean a fine or potentially time in jail for company owners or staff if there's a conviction.