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TJX Caught Red-Handed Selling Recalled Products, Fined $13 Million

TJX agreed to pay a $13 million fine to the Consumer Product Safety Commission (CPSC) for selling previously recalled products.

The agreement and concurrent civil penalty settles charges levied by the government agency that the TJ Maxx, Marshalls and HomeGoods owner knowingly sold, offered for sale and distributed 1,205 units of 21 separate recalled consumer products during the five-year period from March 2014 through October 2019.

“At TJX, product safety is very important to us and we prohibit the sale of recalled items in our stores,” a spokesperson for TJX told Sourcing Journal in a statement. “We deeply regret that in some instances between 2014 and 2019, recalled products were not properly removed from our sales floors despite the recall processes that we had in place. We have made a significant investment in people, processes, and technology to strengthen our processes, and have cooperated fully with the Consumer Product Safety Commission.”

The two recalled apparel products under scrutiny were Carter’s children’s cardigan sets and Ivanka Trump scarves, with other items including Linon home foldable wood patio chairs, HVTM foldable lounge chairs and Swagway hoverboards.

The hazards posed by the recalled products include, but are not limited to: death, fire, explosion, burn, laceration and choking.

Of the 1,205 units sold post-recall, 960 units posed a risk of infant fatalities. These products include Fisher-Price Rock ‘n Play sleepers, for which the CPSC and the recalling manufacturer reported receiving 30 reports of infant fatalities; Kids II rocking sleepers, for which the CPSC and the recalling manufacturer reported receiving five reports of infant fatalities; and the Fisher-Price inclined sleeper accessory for play yards.

None of the reported fatalities identified TJX as the retailer of the product.

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TJX specifically ran afoul of the Consumer Product Safety Act (CPSA), which declares it unlawful for any person to sell, offer for sale, manufacture for sale, distribute in commerce, or import into the U.S., any consumer product that is subject to voluntary corrective action, such as a recall.

“Today’s $13 million civil penalty against TJX represents CPSC’s next chapter of real accountability and deterrence,” said CPSC commissioner Richard Trumka in a statement. “TJX knowingly sold recalled products, the great majority of which were inclined infant sleepers tied to infant deaths, like the Fisher-Price Rock ‘n Play. CPSC will continue to deter misconduct through all available tools. This case warranted a large civil penalty, other cases may call for criminal prosecution. Strong and frequent use of CPSC’s enforcement authority will keep consumers safe and healthy.”

CPSC chair Alexander Hoehn-Saric said in a statement that news of the fine “is not the end of this case for CPSC or TJX.” The off-price retailer agreed to maintain a compliance program and system of internal controls to ensure that it meets the obligations of the CPSA, including a program for the appropriate identification, quarantine and disposal of recalled products.

As part of the identification program, TJX must implement a product master database that consolidates product style information of the company’s brick and mortar retail chains, including TJ Maxx, Marshalls, HomeGoods and Homesense. Additionally, the retailer must disseminate recall-related communications to stores, along with a catalog of recalled product information.

The Massachusetts-based retailer is also required to review claims, report safety concerns and implement corrective and preventive actions when compliance deficiencies or violations are identified. The retailer must also establish senior management oversight of the compliance program, including the creation of a vice president of risk and compliance.

TJX has also agreed to file annual reports regarding the compliance program and internal control system for a period of five years.

In his statement, Hoehn-Saric expressed his desire for the Commission to be able to levy larger penalties.

“The $13 million civil penalty is near the statutory maximum CPSC could have sought had the agency pursued the case in court,” Hoehn-Saric said. “This cap on CPSC’s civil penalty authority, however, is a serious impediment to the agency’s efforts to deter large corporate actors from violating consumer protection laws. With the market capitalization of the largest retailers calculated in the billions, a penalty of $13 million or even $100 million could easily become a cost of doing businesses. In order to best protect the public, I urge Congress to remove or dramatically increase the existing limits on CPSC’s civil penalty authority.”

With that said, Hoehn-Saric lauded the agency’s decision, calling it “a strong statement from an agency that has issued very few penalties in recent years.”

“It sends a clear message to the industry about the vital importance of compliance with product safety laws, the need to implement robust systems to stop the distribution and sale of products once they are recalled, and the agency’s commitment to holding companies accountable when they put the public at risk,” he said.

The Commission voted 4-0-1 to provisionally accept the settlement.

Despite the charges levied, TJX’s settlement does not constitute an admission by the retailer that it knowingly violated the CPSA. The retailer insisted in its response to the CPSC’s charges that it had processes and procedures in place to implement recalls, including to remove recalled products from the sales floors of its stores and to implement SKU blocks and thereby prevent post-recall sales.