U.S. product recalls fell more than 10% in the third quarter of 2023, the largest quarterly decline recorded in over three years according to Sedgwick’s latest Recall Index report. Despite this decrease, 2023 still remains on track to hit a five-year high for total recall events.
The number of recall events fell from 856 in Q2 2023 to 740 in Q3 2023, a decrease of 13.6%. U.S. industries also saw the number of defective units recalled decline in Q3 2023, falling a more significant 61.9% from the previous quarter and bringing the total number of units recalled in 2023 to 528.7 million. While this makes it unlikely that 2023 will be the third consecutive year to exceed more than one billion units recalled, it is not impossible; each of the past three years experienced a single quarter with more than 400 million units recalled.
In this latest edition of the Index report, Sedgwick’s brand protection experts analyze recall data from the third quarter of 2023 and preview the fourth quarter with key insights from October. In addition, to assist stakeholders in preparing for regulatory changes and evolving product safety risks their industry may encounter in 2024, the Index report also provides key analysis and guidance from our strategic partners at leading U.S. law firms.
Automotive industry juggles EV uptake issues and evolving regulations for AVs
While research suggests consumers are interested in buying electric vehicles (EVs), significant obstacles remain for EV sales to truly take off. Consumers are wary about a lack of national charging infrastructure and the higher costs associated with EVs, while dealers are concerned they do not have the knowledge necessary to sell or service these vehicles. It remains to be seen how automakers, regulators, or lawmakers will address these obstacles. However, lawmakers have set a clearer path forward for their oversight of autonomous vehicles (AVs) with Congress taking steps to advance rules specifically designed to regulate AVs. Automotive recalls decreased 15.8%, from 234 in Q2 2022 to 197 in Q3. The number of units impacted also fell 3.6% from Q2, to 7.9 million units in Q3. Reflecting the sectors shift to electrification, electrical systems were the leading cause cited for the third consecutive quarter. Download your copy of the Index report to discover more.
Consumer product regulators continue heightened enforcement activity
The Consumer Product Safety Commission (CPSC) has continued its aggressive approach to its enforcement responsibilities, especially against companies that fail to promptly report suspected safety issues. The Federal Trade Commission (FTC) has followed suit, increasing scrutiny over fake reviews and other actions that harm consumers. The use of artificial intelligence (AI) in consumer products and beyond has also caught the attention of regulators, who will likely begin work on industry-specific rules soon as they receive more guidance from lawmakers on how the technology should be regulated. The number of consumer product recalls fell 14.5% from the previous quarter, while the number of units impacted decreased a more significant 58.0%. The CPSC issued fines in excess of $20M in Q3, pushing the year-to-date total to $55.3M, which exceeds the total annual fines for all other years on record. Download your copy of the Index report to discover more.
FDA turns focus to food additives and continued food safety improvements
In the third quarter, the Food and Drug Administration (FDA) took several actions to strengthen the safety, resiliency, and oversight of the infant formula industry. The agency issued warning letters to three infant formula manufacturers in August, and in September issued an update on its strategy to help prevent Cronobacter sakazakii illnesses associated with consumption of powdered infant formula. The agency may also be preparing for an overhaul of its food additive regulations, issuing a first of its kind public inventory of ingredients that do not qualify as “generally recognized as safe (GRAS).” In the months since, the FDA and states like California and New York have taken additional steps to reevaluate which food additives are allowed in the U.S. In Q3, FDA recalls fell from 153 in Q2 2023 to 131, while the number of units impacted decreased 64.8%. Notably, the U.S. Department of Agriculture (USDA) was the only industry where the number of recalls increased in Q3 2023, from 17 in Q2 to 18. The number of pounds recalled by the USDA also increased to 467,811 pounds, 27.9% more than the previous quarter. Download your copy of the Index report to discover more.
FDA may increase scrutiny of medical device industry
The FDA is seeking to increase patient access to at-home-use medical technologies to give patients more power to manage their own care. However, the increased use of at-home technologies could encourage some manufacturers to position their products as having more capabilities than those for which they have been approved. The FDA has indicated it is prioritizing enforcement around “intended use creep,” issuing three new guidances around its 510(k) Program and sending two warning letters to companies for claims outside their approved uses. The medical device industry saw recall events fall 7.9% from the previous quarter, with quality concerns remaining the leading cause. The number of units impacted fell a more significant 63.1%, from 66.4 million in Q2 2023 to 24.5 million in Q3. Download your copy of the Index report to discover more.
FDA seeks to regulate cosmetics in same manner as drugs
Cosmetics manufacturers may soon face regulations that mirror those currently existing for drugs following the passage of the Modernization of Cosmetics Regulation Act of 2022 (MoCRA). The FDA has issued draft guidance to help companies adapt to the new regulatory landscape, offering clarity around certain definitions and helping with submitting necessary listings and registrations. The FDA is also working to clarify promotional materials that accompany drug products, issuing a final guidance for how manufacturers and marketers should present certain information in Direct-to-Consumer labeling and advertisements. The number of pharmaceutical recalls fell from 135 in Q2 2023 to 107 in Q3, a decrease of 20.7%. Despite this decline, 2023 remains on track to reach a ten-year high in terms of pharmaceutical recall events. Download your copy of the Index report to discover more.
As 2023 comes to a close, companies will find themselves preparing for another year with continued regulatory scrutiny and enhanced enforcement activity. While recall data may fluctuate quarter to quarter, recent yearly trends indicate that recall activity is on the rise, especially as both consumers and regulators pay closer attention to product safety. New technology across industries, whether that be AI or AVs, will also introduce new risks for manufacturers and companies throughout the product lifecycle. With the ever-evolving risk landscape, it is never too early to prepare for an in-market product crisis.
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 beverage, medical device, and pharmaceutical industry stakeholders navigate the regulatory environment, product recalls, and other in-market challenges.
To download your copy of the latest Recall Index report, click here.