U.S. product recalls increased 10.6% year-over-year in 2023, marking a seven-year high according to Sedgwick’s 2024 State of the Nation Recall Index report. Across the five key industries tracked by Sedgwick, there were 3,301 recall events in 2023.
The number of defective units recalled in 2023 did not pass the one billion threshold, as seen in the previous two years, but there were still 759.36 million units recalled for the year. While this is a 48.7% decrease from the number of defective units recalled in 2022, it is still a significant amount. And with the number of recall events steadily increasing for two consecutive years, companies need to remain vigilant about product safety.
This special edition of Sedgwick’s Recall Index report goes beyond its traditional quarterly reviews, offering a year-in-review analysis of 2023 recall data and product safety trends. The report also provides essential insights and predictions from Sedgwick’s brand protection experts and network of strategic partners on the legal, regulatory, and economic risks facing the automotive, consumer product, food and drink, medical device, and pharmaceutical industries in 2024.
Electric vehicles remain priority but face roadblocks to adoption
Policymakers and regulators pushed to advance the transition to electric vehicles (EVs) in 2023, whether by working to develop a national charging infrastructure, offering tax incentives, or proposing new federal vehicle emissions standards for several classes of vehicles. Despite these efforts, consumers are hesitant to embrace the transition to EVs and dealers feel unprepared to sell or service EVs. Automakers will be faced with the challenge of manufacturing vehicles that meet consumer demand and achieve compliance with the federal push for lower vehicle emissions. Autonomous vehicles (AVs) will likely remain a key focus in 2024 as regulators scrutinize their development and consider new safety rules for AV technology. Automotive recalls fell 4.1% in 2023, the second consecutive year that recalls have declined. Conversely, the number of units recalled increased 23.1% year-over-year.
Consumer product regulators had a busy year in 2023
The Federal Trade Commission (FTC) had a busy year protecting consumers in 2023, enforcing several of its policies, including challenging the use of “Made in America” labels, cracking down on companies that use deceptive advertising practices and false claims, advancing its revised “Green Guides” for promoting eco-friendly products, and acting on junk fees. Likewise, the Consumer Product Safety Commission (CPSC) was busy improving consumer awareness about product recalls and seeking penalties for companies that failed to report suspected safety issues properly. The CPSC also continued to use more public avenues, like unilateral press releases, as a tool to advance consumer safety. With all the regulatory activity this year, it is no surprise that consumer product recalls reached a 10-year high in 2023, with 322 events. The number of units impacted also reached a seven-year high, and 2023 was a record year for fines, with $55.3 million issued by the CPSC.
FDA focused on clarity for consumers and its own restructuring in 2023
The U.S. Food and Drug Administration (FDA) was still recovering from the 2022 infant formula recall crisis in 2023, and issued several updates, recommendations, and warning letters to industry stakeholders throughout the year to get product safety for the category back on track. The agency also continued to work through the restructuring of its Human Foods Program (HFP). In December, the new HFP deputy commissioner announced the program’s priorities would be to prevent foodborne illness, decrease diet-related chronic disease, and safeguard the food supply. Another key issue for the FDA was food labeling, which the agency addressed with recommendations for plant-based milk alternatives, new guidance on the use of Dietary Guidance Statements in food labeling, and its Compliance Policy Guide regarding major food allergen labeling and cross-contact. There were 506 FDA food recalls, a five-year high for the industry and 19.6% more events than were recorded in 2022. U.S Department of Agriculture (USDA) recalls also increased, rising 41.3% year-over-year, from 46 events to 65.
Pharmaceutical industry saw many changes resulting from 2022 legislation
The Consolidated Appropriations Act, 2023 (H.R. 2617) brought about many changes for the pharmaceutical industry, primarily through provisions in the Food and Drug Omnibus Reform Act of 2022 (FDORA) and the Modernization of Cosmetics Regulation Act of 2022 (MoCRA). MoCRA will impose stricter oversight so that cosmetics are regulated in a similar way to pharmaceuticals and other products under the FDA’s purview, requiring manufacturers to make changes to their operations to achieve compliance. Other changes resulted from the end of the federal COVID-19 public health emergency, although some policies the FDA implemented during the pandemic are being adopted on a permanent basis. The pharmaceutical industry broke a significant record for product recalls in 2023, reaching a 15-year high and increasing 42.4% from 2022 to 2023. In contrast, the number of units impacted fell 82.6% to 98.51 million in 2023, from 567.35 million in 2022.
FDA had a full 2023 agenda for the medical device industry
While the FDA did not have a consistent focus throughout 2023, it made several moves that could change how the industry is regulated going forward. In March, the FDA granted marketing authorization to an infant sleep system as a medical device instead of a consumer product, which experts speculate could impact the basic definition of a medical device going forward. The agency also took an interest in the role of technology in the industry, publishing guidances around continuing and expanding the use of telehealth platforms and at-home-use medical technologies. Looking ahead, the FDA has indicated it will provide guidance on issues relating to digital health technologies—including artificial intelligence, wearables, virtual reality, and remote patient monitoring—through the creation of a Digital Health Advisory Committee. Medical device recalls rose for the second consecutive year to 975 events. Three out of four quarters were dominated by recalls for quality-related incidents, which is the first time quality has been the leading cause of recalls for even a single quarter since the beginning of 2016.
Looking ahead
Strict regulatory enforcement is no longer a passing trend but is now a reality that businesses in all industries must contend with. The pressure is on from regulators, policymakers, and consumers for businesses to ensure the highest standards of product safety or face reputational damage, regulatory scrutiny, monetary damages, and even lawsuits. To weather this growing storm, businesses will need to prioritize their planning and preparation for in-market product crises.
The U.S. Recall Index is published every quarter by Sedgwick’s brand protection experts. It is the only report that aggregates and tracks recall data across the U.S. to help automotive, consumer product, food and drink, medical device, and pharmaceutical industry stakeholders navigate the regulatory environment, product recalls, and other in-market challenges.
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