Yikes! – I Sold a Defective Product – Now What?


We hear about defective products all the time. Exploding cell phones, faulty car breaks, and more have all fallen subject to product recalls in just the past few years alone.

Even when businesses have strong product quality, assurance efforts in place, accidents do happen and faulty products can make their way to market.

However, before we get into all the things to do once you have become aware that your business has sold a defective product, there are essential steps to take prior.

Purchasing quality product liability insurance coverage is crucial to being prepared for situations like a product recall and ensuring the financial stability of your business.

The following actual statistics illustrate the serious harm that can result from product manufacturing defects

  • In 2013, 22 homes in Arkansas had to be evacuated when an Exxon-Mobile pipeline burst as a result of a manufacturing defect, causing a massive oil spill.[1]
  • In 2012, a manufacturing defect in playing cards allegedly caused The Borgata Hotel Casino in Atlantic City to lose $9.6 million dollars.
  • A single manufacturing defect in the Odyssey’s oxygen tanks is what caused NASA’s Apollo 13 mission crew to turn back before they reached the moon.
  • Chrysler recently recalled 1.62 million Jeeps after 2 manufacturing defects present within that type of vehicle caused several fatal accidents, including 37 fires following rear-end collisions.
  • Harley-Davidson recently announced a recall of one type of its motorcycles after it was discovered that a manufacturing defect led to the brake fluid draining out, resulting in serious brake defects.


A highly defective product can be the source of a wide range of bodily injuries including cuts, burns and amputations. In rare cases, defective products can also cause death which may lead to criminal charges in addition to civil liability – for example if one defective component triggers an electrical fire that kills several people.

Defective product liability claims can be complicated and it is important to seek legal advice as soon as possible. If your defective product claim succeeds, you may be able to recover damages for physical injuries, pain and suffering, property damage, and loss of earnings.

If defective products you have been involved with cause personal injury, liability can fall on various parties in the supply chain including:

  • The product manufacturer
  • The product designer
  • The product importer
  • The product wholesaler, distributor
  • The product retailer

It is important to note that defective product liability law only applies to defective products, not defective services and the fact that a defective product caused your injury does not necessarily mean that you are entitled to compensation.

Your defective product claim could be rejected if liability cannot be established through fault on the part of the manufacturer, distributor or retailer.

Even the most well protected and prepared
companies can sell a faulty product and be at risk.

When this happens, here are some crucial steps to take to minimize risk and ensure the safety of your customers.

1. Issue a notice

The first step to take once a company realizes it has sold a defective product is to issue a public notice.

As soon as you learn that the product may be dangerous, it is necessary to tell your customers immediately.

No matter the complexity of the issue or the anticipated backlash, it is essential to inform the public as soon as you know.

There are multiple methods of dealing with this type of crisis communication, but be sure to reach our customers via every media possible to ensure that everyone has purchased the defective product is informed.

Your website, via email, and on social media are all perfect ways to spread the information quickly.

2. File a report

There are laws currently in place in the United States to handle situations such as these.

One of these laws is that a business must file a report with the United States Consumer Product Safety Commission (CPSC).

This report must be made within 24 hours once you have become aware that your product sold is faulty.

During this process, the CPSC will open an investigation into the defective product and they will ultimately decide whether or not the product needs to be recalled from the market.

3. Be Responsive

Once your customers have been informed and the proper paperwork has been completed, it is important to continue caring for your customers.

This can mean many things depending on your type of business and product.

However, in the end, it all comes down to being responsive.

Examples of this could include accepting returns of the product, engaging with customers via social media or email, or providing assistance where possible.

All of these efforts show that you really care for your customer by taking ownership and providing support to those affected.

4. Cover your bases

The last step of dealing with a defective product is to contact your manufacturer and attorney to assess the situation and determine next steps.

Even if the fault is not on the manufacturer, they must be kept in the loop, as they will likely be involved in the CPSC’s investigation.

Additionally, depending on the severity of the defect, an attorney may be necessary.

What can you do today to prepare?

No one expects to have a defective product – but it is best to be prepared for any situation. Purchasing product liability insurance is a great first step.

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