“Product recalls are becoming so expensive thanks to the new Product Safety Regulation that every single one could mean our bankruptcy!” – But is that really the case?

Regulation (EU) 2023/988 has been in force since 06/2023

Regulation (EU) 2023/988 (“General Product Safety Regulation – “GSPR”) has been in force since 06/2023 and must be complied with from 13.12.2024. It replaces the Product Safety Directive 2001/95/EC and thus leads, among other things, to significant changes with regard to remedial measures for consumers in the event of a recall.

The current legal situation stipulates that the manufacturer is obliged to take appropriate measures to eliminate potential hazards. This will not change and will continue to be the case, but many people are still unaware that the manufacturer only has to bear the costs for the duration of the statutory warranty period.

This is set to change with the new regulation!

Manufacturers bear costs beyond the warranty

From now on, the manufacturer will be obliged to bear the costs of remedying recalls vis-à-vis the consumer, even outside the scope of any warranty periods. In addition, the manufacturer must give the consumer the choice between two of the following three alternatives:

  • Repair of the product,
  • Replacement of the product or
  • Reimbursement of the purchase price (note: purchase price is not current value).

The consumer, in turn, has to choose between one of the two given alternatives.

This brings us to our initial question:

Will product recalls become significantly more expensive with the new Regulation (EU) 2023/988?

The first answer is: Yes, they will!

However, the regulation also offers the responsible economic operator a certain degree of protection. After all, not all companies will be able to afford to replace a faulty vehicle with an equivalent one for every customer. The key word is proportionality. The regulation stipulates that the controller only has to provide the consumer with one alternative remedy if the other alternatives would be impossible to implement because they would simply be disproportionate. However, the alternative offered must not lead to any significant inconvenience for the consumer.

Lessons learned for manufacturers, importers and retailers:

Product recalls will generally become much more expensive as a result of the new product safety regulation. However, the law only allows a recall to be carried out by repair if otherwise disproportionately high costs would be incurred.

Please do not hesitate to contact us if you need further training or advice on product recalls. We are happy to assist you!

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