Product Certification PDF

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Product Certification - Product certification is the process of providing documented assurance that goods or services have passed performance and quality tests before they are marketed - Becoming more common, as more businesses claim that their products meet certain safety, health or environmental standards, or that their products are made in Australia - Globalised world – trade knows no boundaries – consequently it is vital that all products meet certain minimum safety and performance standards before they can be sold to Australian consumers - Businesses certify their products in this way because more and more consumers are conscious of these factors and will buy a healthy or environmentally-friendly product rather than an alternative product that does not have such certification. - Businesses are not permitted to make claims about their products, or certify that they meet certain standards, if these claims are false or misleading. Legal responses -

ACCC - Competition and consumer act  NSW fair trading act – enforce standards/legislation - Australian competition and consumer commission (ACCC) Enforces mandatory product safety and information standards and bans unsafe goods under the competition and consumer act 2010 (cth) - The NSW office of fair trading via the trading act 1987 (NSW) also has an important role in monitoring product safety - PRODUCT SAFETY o Under Australian law, product suppliers and manufacturers have an obligation to ensure that only safe products are marketed. This is done by:  Providing clear instructions for use, including warnings against possible misuse.  Being aware of and meeting industry and mandatory standards.  Developing product recall plans and procedures, including strategies for effective communication to the public.  Incorporating safety into product design  Raising the level safety into product design  Implementing a quality assurance program which includes consumer feedback.  Responding quickly to safety concerns that arise. o Media article – ACCC figures reveal record number of product safety recalls for 2014 (2014,SMH) – ACCC- effective at their job - MANDATORY PRODUCT STANDARDS: o A standard can be made mandatory by either a statutory regulation or a notice published in the Commonwealth Gazette. There is a legal requirement that suppliers must refer to both the gazette notice and its ‘Standards Australia’ benchmark. o Information standards:  Prescribed information must be given to consumers when they purchase specified goods. o Safety standards:  There are legal requirements and contain safety, labelling and design requirements. They are established when there is a clear risk to consumers. - PRODUCT CERTIFICATION: o Consumer goods must pass performance and quality assurance tests according to an industry code and/or nationally accredited test standards. Essentially, if a product gains certification, it has complied with a set of regulations governing quality and minimum performance standards. o Certification of products indicates their established suitability for specified purposes. Further, the certification process has varying levels of stringency. The

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greater the risk of injury to consumers, the more demanding the certification process will be. Certification or quality marks are also regarded as powerful marketing tools that build consumer confidence. The ‘Five Ticks’ Standards Marks is a well-known product certification symbol used in Australia and internationally. It is recognised as a symbol of safety and quality, indicating that the product and its production processes have been assessed as meeting recognised national or international standards. The Standards Mark is more than a manufacturer’s claim, as it gives consumers extra confidence in the safety and performance of the product they are purchasing. Certification marks on goods provide the consumer with legal assurance that:  There is a product certification agreement between the manufacturer of a product and an organisation with national accreditation for both testing and certification.  The product was successfully tested against a nationally accredited standard.  The accredited certification organisation guarantees that the item tested is identical to the one offered for sale.  The successful test has resulted in a ‘certification listing’, which sets out the conditions of use for the certified product and its compliance with the law (delisting occurs in the case of non-compliance).  The manufacturer is regularly audited by the certification organisation to ensure the maintenance of the original quality standard that was employed in the manufacturer of the test specimen.  If the manufacturer fails an audit, all goods certified will be immediately removed from the market with the consumer compensated accordingly. A certification listing indicates to the consumer that:  The product is manufactured under a certification that exists between the manufacturer and the certification organisation: this means that the certifier will conduct unannounced factory audits each year to ensure that the product being made is still identical to the one that was tested.  The manufacturers packaging, literature and promotional information are authorised to use the certification mark.  Listing is a matter of public record and can be checked for validity. - Bindeez Beads (2007) case: o Bindeez Beads are plastics beads designed to be assembled into picture and designs using a water spray device included in the kit. Bindeez Beads were manufactured in China for the Australianowned company Moose Enterprise, and were distributed in 40 countries worldwide – 12 million packets containing more than 8 billion beads were sold. o In 2007, the toy was subject to product recall after it was found that the factory in China had used a toxic chemical in place and of one that is safe. When swallowed, the substance metabolises to form a sedative and anaesthetic. o The law was unable to protect these children that made the defect public (two children became seriously ill after consuming the beads). o Safety standards were bypassed as this product was made in China o The product recall is reactive – an incident had to happen before action was taken. o The product recall is effective at ensuring the product is removed – but is it possible to recall all 8 billion beads? o The beads are now manufactured using only approved ingredients, with a bitter-tasting coating to discourage children from eating

them – aims to protect children in the future and not lead to anymore harm. Non – legal responses -

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Individuals may take action through one of the independent consumer groups which advocate on behalf of consumers, lobby parliaments to influence legislation, and act as consumer ‘watchdogs’ to highlight unsafe products in the Australian market. The media can also be a powerful tool highlighting and publicising consumer safety issues. Media – educates on the failures of some companies, media article – Samsung recalls note 7 after battery fires (2016, SMH) o Good Environmental Choice Australia (GECA):  The GECA uses the highest international standard for eco-labelling.  Products which meet the standard can display the GECA logo.  However, many consumers do not know about this logo.  One company, Orange Power that makes cleaning products and has earned the right to display the GECA logo, found that its sales only increased when it obtained paid endorsement from Planet Ark.  MEDIA ARTICLE Regulator demands muscle on “green” ads (SMH, 2010):  Highlights the growing incidence of businesses which make environmentally-friendly claims for their products and the importance of such certification for businesses and consumers.  The bigger companies are being very careful. They know the ACCC has made it very clear we won’t tolerate excessive claims because we are concerned about consumers being duped.  Companies making false environmental claims can suffer reputational damage, but there are no financial implications for them.  The ACCC has called on the government to pass legislation to give it more power to tackle exaggerated environmental claims, including the ability to issue fines up to $1.1 million for misleading claims. Choice Magazine (NGO) - investigates and publicises finding against products not complying with the standards (shonky awards)

Effectiveness: -

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Product certification assists consumers to know that the product they are purchasing meets the standards claimed for it. Businesses which certify that their products meet certain standards or requirements can increase sales because consumers are more willing to buy a certified product than an uncertified one. It is illegal for companies to make product meet certain claims that are false, and consumers have recourse to many remedies if false claims are made. Businesses that make false claims may not face consumer claims and, in some cases, penalties but can also suffer from reputational damage persuading businesses to comply with the law and the media and other NGOs publicise heavily on product certification breaches. Both the ACCC and Fair Trading play a central role in educating businesses on consumers about product safety, and produce publications on safety and standards. They also conduct ongoing marketplace surveys to ensure that products continue to meet acceptable standards. Both organisation can prosecute suppliers who ignore their statutory obligations. Where problems do occur with a product, both the ACCC and Office of Fair Trading have powers to remove unsafe goods from sale. This might include recalling dangerous products or a public warning of a particular defect.

Ineffectiveness: -

Australia is one of the most open markets in the world. With thousands of importers across our country, it is very difficult to ensure that unsafe products will not enter the market. It is necessary to rely on the ACCC, ASIC and Fair Trading, the media and industry self-regulatory bodies to bring unsafe goods to the attention of the public. This commonly only occurs after the fact.

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The effectiveness of product certification relies on consumers being aware of what the certification stands for. Well-known certification marks, such as the Heart Foundation tick, make such certification effective for both businesses and consumers but, in other cases, such as that of the ‘environmentally friendly’ GECA logo, many consumers are not aware of the significance of the logo. There has been a sharp rise in the number of complaints about exaggerated ‘green’ claims by companies, indicating that some businesses are unscrupulous in this area. The ACCC has limited power to deal with false product claims and has called on the federal government to give it more power in this area and to allow for the impositions of heavy fines.

Response Legal responses

Description ACCC- main body to enforce the provisions of the ACL and does regular audits of manufacturers and companies to ensure that products comply to with implied and mandatory standards. (Big-W pyjamas, Skippy) Fair Trading – much like the ACCC but works in NSW and works more with consumers and investigates complaints of non-compliance (USB and Treadmill recall) ASIC – audits and maintains that the market participants act with integrity with regard to contracts, loans, superannuation and other financial products and services. ACL – respond to the growing need for product certification Food authority (Fuze juice case)

Non-legal Responses Choice Mag (NGO) – investigates and publicises finding against products not complying with the standards (shonky awards). Media – educates on the failures of some companies.

Evaluate the effectiveness of the response National standards allow consumers to feel protected and confident in the goods and services they are purchasing and ensure consistency. They are aim to inform and educate the public about the current product standards and acceptable product certification. All these mechanism aim to achieve justice and meet society’s need for more monitoring of product certifications. Issues of compliance due to a greater importation of good with lower standards and cannot ensure that all products meet the requirements. Due to the great number of products on the market hard to monitor all goods and services. Big-W case highlights enforceability and pressure that ACCC puts on businesses to comply with the law, however, cannot regulate on all cases. Commonly the onus is on the consumer to notify these responds and then wait for remedies. It is hard to properly punish large corporations due to their power and presence in the business community. These mechanisms have powers to put pressure on businesses to voluntarily comply. Big companies want to comply with the standards to entice consumers. They are not enforceable NGOs are certifying products and so have the interests of consumers at heart and not companies. Relies on the awareness of the consumer choice and media to inform and educate the public. Reputation can be suffered by not complying with NGOs and media expectations....