When a recall occurs, there are many steps companies must think about, including what the appropriate remedy should be.
Depending on the industry and the type of product, there are generally four options to choose from: full reimbursement, a coupon or credit toward the purchase of a similar item, replacement, and repair. In some cases, companies may choose some combination of those options based on the age of individual products affected and other factors involved.
But while many steps of the recall life cycle are determined by regulatory mandates, remedies are not specifically spelled out. Some regulatory agencies have preferences. Others will review the proposed remedy and either give it the green light or reject it if it doesn’t go far enough to promote response and protect consumers. But beyond that, companies have a lot of leeway in determining how far they will go to make a situation right.
Some companies have offered less-than-satisfactory remedies and suffered consequences as a result. A hoverboard company made headlines when it issued a recall due to faulty, fire-prone lithium-ion batteries and only offered its customers a credit toward clothing. To add insult to injury, customers complained that the clothing options were out of style and came in limited sizes.
In another case, a brand of pet food recalled due to contamination offered coupons toward the purchase of replacement food – even to customers whose pets became severely ill or died as a result of the food.
Insufficient recall remedies can lead to consumer frustration and negative media coverage. The best practice companies should follow is to offer a fair remedy – maybe even one that goes above and beyond what the customer might expect. Taking that extra step can help preserve customer loyalty for the long run.
If there is any uncertainty, companies should consult with an expert who has managed hundreds of recalls in their specific industry. An experienced team can provide valuable insight into the response a proposed remedy is likely to receive from consumers and regulators alike.
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