Calculating the Risks of Product Recalls

N E W   Y O R K, Aug. 31 -- — Cribs that choke babies. Flammable sleepwear. Cyanide-laced Tylenol capsules. Firestone tires that allegedly peel off their casings, triggering blowouts and rollovers.

While the headlines and images associated with prominent U.S. product recalls are vivid for many consumers, the behind-the-doors process companies engage in before deciding on formal recalls remains elusive.

But taking a closer look at how companies weigh the complex benefits and risks associated with recalls — with the help of a group of product recall, law and marketing experts — reveals how firms must carefully juggle consumers’ safety, liability issues, and the long-term health of the companies’ brands, all in a timely manner.

Experts say consumers have a stubborn, long-term memory when it comes to companies that even inadvertently seemed to drag their feet about botched products. And in the vacuum of information, consumers easily grow suspicious, they added.

Once the debate about whether or not to pursue a formal product recall ends, an old business adage seems to ring true — the customer is always right.

“Consumers are pretty understanding people. They don’t expect you to be perfect,” said R. David Pittle, a former commissioner for the U.S. Consumer Product Safety Commission, which oversees the safety of many consumer products ranging from clothes to baby cribs. “But they do expect you to be in their corner when trouble hits,” Pittle said.

Safety First

Among the myriad of factors a company examines when considering a product recall, figuring out the exact nature and extent of the problem — and any related impact on consumers’ safety — ranks among the top.

Experts say the case of cyanide-tainted Tylenol capsules in 1982 illustrates how the public’s safety, foremost, prompted the McNeil Co. to immediately recall some 264,000 bottles of Extra-Strength Tylenol.

The swift action followed reports of several people who died in suburban Chicago after taking the pain-killing capsules. They were laced with the poison locally, not during the manufacturing process, investigators concluded.