U.S. product recalls on track to reach six-year high in 2024

Sedgwick brand protection releases Q3 2024 U.S. Recall Index report

MEMPHIS, Tenn., Nov. 14, 2024 /PRNewswire/ -- According to the latest Sedgwick brand protection U.S. Recall Index report, year-to-date (YTD) in 2024 there have been 2,454 product recalls across five key industries. This is closely aligned with the 2,459 recalls recorded through the first three quarters of 2023—a year that ultimately set a five-year annual high for total recalls. Should the pace of recalls continue in the fourth quarter of 2024, we will reach a six-year high by year-end.

Year-to-date, defective units rose to 580.4 million, up from 528.7 million in the same period in 2023. The 9.8% year-over-year increase was primarily driven by growth in three industries: medical device, which rose 134.5%; U.S. Department of Agriculture (USDA) food, up 112.7%; and consumer product, which experienced a 38.5% uplift. In addition to providing YTD analysis of U.S. recall data, the Index report also provides a look at quarter-over-quarter shifts. In Q3, both recalls and defective units fell from the previous quarter, but that trend typically reverses during Q4 due to year-end consumer behavior and other external factors.

Sedgwick's industry-leading Recall Index report provides an in-depth review of the latest product recall data, safety regulations, and key challenges for the automotive, consumer product, food and drink, medical device, and pharmaceutical industries. Released quarterly, the report features perspectives from Sedgwick's brand protection experts and network of strategic partners. The Index is a key resource in helping mitigate recall and litigation risk and protect against reputational damage caused by product crises and in-market events.

Product recall highlights from Q3 2024

• Automotive recalls decreased by 3.3% in Q3, dropping from 243 in Q2 to 235 and marking the second-lowest total in two years. However, the number of affected units rose sharply, up 43.6% quarter-over-quarter to 7.14 million.
• The consumer product industry saw recalls fall 20.9%, from 86 in Q2 to 68 in Q3. Defective units also experienced a significant reduction, falling 73.9% from 39.07 million in Q2 to just 10.18 million.
• In the food and drink sector, the U.S. Food and Drug Administration (FDA) recorded a 5.9% drop in recalls to 111 events and a 52.2% reduction in affected units to 4.62 million. In contrast, USDA recalls rose 50.0% in Q3, with affected units surging by 5,366.7%, primarily due to a major recall for Listeria contamination. This increase marks the second-highest quarterly USDA total of affected units in more than five years.
• The medical device industry was the only other sector to see more recalls in Q3 than in Q2. There were 262 events, an 8.3% increase over the 242 events in Q2. The 158.73 million units recalled in Q3 is the second-highest total in the past two years, just behind Q2's 196.15 million units.
• Pharmaceutical recalls dropped 24.7% to 70 events in Q3, reaching the lowest quarterly figure since Q4 2021. Conversely, defective units rose 80.2% quarter-over-quarter to 8.19 million.

Looking ahead

• Automotive: U.S. policymakers took additional steps in Q3 to shore up the U.S. automotive supply chain to protect domestic manufacturers and improve transparency. As the average age of vehicles on the road continues to increase, the National Highway Traffic Safety Administration (NHTSA) issued a final rule requiring manufacturers to retain certain safety-related documents for 10 years instead of five. Other technology-related safety measures have been delayed, but the automotive industry can expect regulators to prioritize these issues in 2025.
• Consumer product: The U.S. Consumer Product Safety Commission (CPSC) continued its aggressive enforcement activity during the third quarter. While the agency has increasingly leveraged unilateral press releases in past quarters, it took a step further in Q3 by issuing a unilateral recall announcement after the seller of a defective product did not cooperate in CPSC efforts to implement a recall. Other activity from the CPSC suggests this stricter enforcement and oversight is more than a passing trend.
• Food and drink: The FDA officially implemented its unified Human Foods Program in October, marking a new era for the regulator. While there may be an adjustment period to the new structure, the FDA has continued with business as usual elsewhere, particularly in scrutinizing ingredient contamination from substances like lead. The USDA is having its turn in the spotlight after a deli meat recall for Listeria contamination prompted concerns about the agency's inspection and enforcement processes. The impact of that recall and the subsequent investigations will likely be felt for the next several quarters.
• Medical device: The FDA focused on providing clarity for medical device manufacturers in the third quarter. The agency issued an updated guidance on what steps manufacturers can take to address misinformation about their products posted by third parties on the internet. Another guidance provided information about what should be included in a predetermined change control plan. The FDA is also facing legal challenges to its new regulatory approach to laboratory-developed tests (LDTs). While the outcome of that challenge is uncertain, the FDA has already begun implementing its stricter oversight of LDTs.
• Pharmaceutical: In the pharmaceutical industry, the FDA made several moves across a variety of product categories. The agency, alongside the Federal Trade Commission (FTC), sent cease and desist letters to five companies it accused of marketing products containing tetrahydrocannabinol (THC) with packaging that was too similar to popular national food brands, especially snacks and candy that appeal to children. The FDA also published its goals for a new Rare Disease Innovation Hub, which would improve collaboration across the FDA's centers to speed the development and authorization for drugs and biologics that target rare diseases.

"We have seen strict regulatory scrutiny over the past several years, with agencies receiving criticism when they don't seem to be doing enough. However, the recent elections may result in weakened enforcement and rulemaking authority for regulators and a shift in priorities," said Chris Harvey, Senior Vice President of Brand Protection for Sedgwick. "However, despite potential policy changes, product safety will remain a key issue for both consumers and regulators, who increasingly turn to social media to spotlight how companies respond to product-related crises. Companies must prioritize their recall readiness to protect their brand regardless of the regulatory landscape."

To download the latest U.S. Recall Index report, click here.

The Sedgwick brand protection Recall Index report 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 www.sedgwick.com/brandprotection.

About Sedgwick 
Sedgwick is a leading global provider of claims management, loss adjusting and technology-enabled 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 over 33,000 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, Altas Partners, CDPQ, Onex and other management investors are minority shareholders. For more, see sedgwick.com.

SOURCE Sedgwick Claims Management Services, Inc.