Recall risk remains prevalent as U.S. regulatory scrutiny continues across industries

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Aug 17, 2023, 13:00 ET

Sedgwick brand protection releases Q2 U.S. product recall index report

MEMPHIS, Tenn., Aug. 17, 2023 /PRNewswire/ -- U.S. recall activity has returned to pre-pandemic levels based on the latest product recall data, which shows there were more than 850 recall events for the second quarter in a row. While recall events fell less than one percent in Q2 2023 compared to the previous quarter, they still remain higher than all the previous quarters between Q1 2019 and Q4 2022, according to Sedgwick brand protection's latest U.S. product recall index report, which analyzes recall data from five key industries.

The number of defective units recalled in Q2 2023 increased 13.7% compared to Q1 2023. The total number of recalled units in the first two quarters of 2023 may not be enough to reach the necessary threshold for a third consecutive record-breaking year for the number of units recalled. However, with more than 439 million units recalled between January and June 2023, and if current trends continue, we may see the number of units recalled at least surpass one billion yet again in 2023.

Released quarterly, Sedgwick's industry-leading recall index report offers in-depth analysis of the latest product recall data, safety regulations, and key challenges for the automotive, consumer product, food and drink, medical device, and pharmaceutical industries. Featuring unrivaled analysis and exclusive perspectives from Sedgwick's brand protection experts and network of strategic partners, the index is a key resource in helping mitigate recall risk, litigation, and reputational damage caused by product crises and in-market events.

Product recall highlights from the first half of 2023

Automotive recalls fell 4.5% in Q2 2023 from the previous quarter. However, the number of units impacted increased 8.0% with back over prevention systems accounting for the most units recalled, which is only the second time we have seen this as the leading cause by unit.
Recalls in the consumer product industry decreased 19.1% from Q1 to Q2 2023, with 76 events. Fire was the top recall hazard by event, cited in 14 recalls. By volume, laceration was responsible for the most units recalled, accounting for 63.6% of all impacted units.
U.S. Food and Drug Administration (FDA) food recalls increased 30.8% from Q1 to Q2 2023 with 153 events. Undeclared allergen was the leading cause of recalls for the tenth consecutive quarter and was cited in more than half of food recalls in Q2 2023. The number of U.S. Department of Agriculture (USDA) recalls increased 54.4% from 11 events in Q1 2023 to 17 events in Q2 2023. The number of pounds recalled fell to 365,665, which is significantly lower than Q1 2023 figures (-87.3%).
Medical device recalls fell 4.4% in Q2 2023 to 241 events, with quality concerns accounting for the majority of recalls for the first time since Q1 2016. The number of units recalled also decreased in Q2 2023, down 20.3% to 66.4 million.
The pharmaceutical industry saw recalls decrease slightly from 144 in Q1 2023 to 135 in Q2, although this quarterly average is still much higher than all quarters on record prior to 2023. Sterility concerns were the leading cause of both recall events and units impacted during Q2 2023.

Projections for the second half of 2023

Regulators, legislators, and consumers will continue to focus on the recent increase in vehicle thefts and to what extent manufacturers are responsible for addressing shortcomings with anti-theft devices. Manufacturers should track the U.S. National Highway Traffic Safety Administration's (NHTSA's) response to a letter from 18 attorneys general, which may result in a mandatory recall of impacted vehicles. As with the past several quarters, legislation and regulations to increase electric vehicle (EV) uptake will remain a focus for the industry.
The U.S. Consumer Product Safety Commission (CPSC) has established a clear intent to further regulate secondary markets, especially as it relates to manufacturers' and marketplace operators' responsibilities for informing consumers of recalled products and removing them from marketplaces. Manufacturers and retailers will want to familiarize themselves with new legislation like the INFORM Act and recent communications and guidance from the CPSC and the Federal Trade Commission (FTC).
The FDA is exploring new regulations for online groceries to ensure they are providing consumers with complete and accurate nutrition information. The agency is also still working through the proposed restructuring to its Human Foods Program, which could impact how the industry is regulated in the future.
Technology in medical devices will be a key focus for regulators and other stakeholders in the remainder of 2023. The FDA has issued draft guidance related to facilitating the marketing approval process for artificial intelligence and machine learning- (AI/ML) enabled devices. The FDA, as well as other regulators such as the FTC, are addressing concerns around data security breaches and cybersecurity in medical devices, which will likely result in new guidelines or regulations for manufacturers.
The FDA is following the example of the European Union and United Kingdom and is revisiting its guidance on clinical trials, focusing specifically on decentralized clinical trials. Like the international regulators, the FDA seeks to spur innovation and clarify its expectations for oversight. Artificial intelligence in drug and biological product development is also a concern for the FDA and will remain an important topic across all industries.

"Evolving risks from emerging technologies like artificial intelligence, as well as increased scrutiny from consumers will introduce new challenges for manufacturers, even as they continue to contend with stricter oversight from regulators," said Chris Harvey, Sedgwick senior vice president of brand protection. "As regulators look to expand product liability beyond manufacturers to include retailers and operators of secondary marketplaces, thorough and well-tested recall and crisis response plans will become crucial to weathering in-market challenges."

To download the latest recall index report, visit Sedgwick's U.S. 2023 edition 2 recall index page.

The Sedgwick brand protection recall index is published every quarter. It is the only report that aggregates and tracks recall data across multiple regulatory agencies and industries to help stakeholders navigate the regulatory environment, product recalls, and other in-market challenges. For more information, visit https://www.sedgwick.com/brandprotection.

About Sedgwick
Sedgwick is a leading global provider of technology-enabled risk, benefits, and integrated business solutions. The company provides a broad range of resources tailored to clients' specific needs in casualty, property, marine, benefits, brand protection, and other lines. At Sedgwick, caring counts; through the dedication and expertise of 31,000 colleagues across 80 countries, the company takes care of people and organizations by mitigating and reducing risks and losses, promoting health and productivity, protecting brand reputations, and containing costs that can impact performance. Sedgwick's majority shareholder is The Carlyle Group; Stone Point Capital LLC, Caisse de dépôt et placement du Québec (CDPQ), Onex, and other management investors are minority shareholders. For more, see sedgwick.com.

SOURCE Sedgwick