NCPA - National Center for Policy Analysis

Criminalizing Sales Of Defective Products Is Self Defeating

September 26, 2000

Some members of Congress are floating the proposal that company executives who knowingly market a defective product which causes death or injury be prosecuted as criminals. But cooler heads are pointing out that such a course would lead to less safety, not more.

They argue that the objective should be to encourage early warnings of possible defects and that the threat of criminal penalties would discourage candor. The public would be much better served in an atmosphere of cooperation, rather than vengeance.

Here are some specific objections to the criminalization scheme:

  • Industry -- not the federal government -- has the most knowledge about products, and regulatory agencies depend upon industry disclosures to fulfill their assigned responsibilities.
  • To strike a proper balance between quickly resolving safety problems and deterring wrongdoing, regulations must encourage cooperation, flexibility and openness.
  • Because product recalls can spell disaster for a firm, company executives operate daily under tremendous pressure to make sure goods they produce and sell are safe -- to the end that recalls are rare and all the incentives are on the side of assuring safety.
  • No statute or regulation clearly defines a safety-related defect.

Analysts point out that threats of criminal prosecution would create a disincentive for companies to collect and analyze data, run tests to check out potential problems, and provide early information to regulators. The scheme might tempt some officials to become like the three monkeys in order to protect themselves -- hearing no evil, seeing no evil and speaking no evil.

Source: Marion C. Blakey (Blakey & Associates), "Criminalizing Auto Defects Is Unsafe," Wall Street Journal, September 26, 2000.


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