Popular retail chain Toys R Us has been fined $10,200 after it was found to have sold cots that were at risk of causing serious injury or even death to infants.
The Australian Competition and Consumer Commission issued an infringement notice to the business following an investigation into whether the ‘Nantucket 4-in-1’ household cot complied with mandatory safety standards.
Toys R Us sold the cots online and in its physical stores between February and November 2013. The business recalled the Nantucket cots after the ACCC found the products could cause injuries to young children from falls, entrapment or suffocation.
Toys R Us has provided a court enforceable undertaking to the consumer watchdog, which states the business will continue to offer free collection, affected costs and refunds to customers. The company has also agreed to provide further notices to consumers about the recall, and enhance its product safety measures.
More than 5000 household cots have been recalled since 2013 as a result of the ACCC’s cot surveillance program.
Alistair Little, partner at TressCox Lawyers, told SmartCompany there are serious financial and reputational risks to a business if its products do not comply with safety standards.
“If you don’t respond quickly, there is always the possibility of a mandatory recall being imposed – which is even more costly than a voluntary recall,” he says.
“In addition, not responding quickly increases the risk that the ACCC will take proceedings to impose fines. Dimmeys was fined $3 million for breaching product safety laws in 2013.”
Melissa Monks, special counsel at King & Wood Mallesons, told SmartCompany it is fortunate for Toys R Us that its failure to comply with safety standards did not result in any serious injuries – or worse – deaths.
“Product safety is one of those areas where a business is well advised to do more than less,” she says.
“While regulatory enforcement actions and potential class actions are significant and can end in relatively big penalties, compensation or other onerous orders, it is the huge fall out from negative PR and the loss of consumer confidence and trust in your brand that is very hard to recover from in the long term. While a product recall is a significant decision for a business to make… acting swiftly will minimise both the legal and commercial risks.”
In a statement, ACCC deputy chair Delia Rickard said retailers have a duty to adopt and maintain a comprehensive compliance program so they do not breach safety standards.
“It is disappointing that the Toys R Us compliance system failed to identify this problem. Companies must have quality assurance systems that can ensure the integrity of their supply chain and that important product safety standards are complied with.”
A number of businesses issued product recalls this year. In May, major Australian retailers including Myer and Target recalled more than 50,000 jeans and pillow cases after it was found the products were made with dyes that contained hazardous chemicals. Last month, a Cairns-based solar power company issued a product safety recall notice after it was discovered their circuit breakers had the potential to catch fire.
SmartCompany contacted Toys R Us for comment but did not receive a response prior to publication.