The Age of Viral Recalls Is Just Beginning

We seem to be in the midst of an epidemic of product recalls, especially the recall of Takata airbags, which may be the biggest consumer product recall in history. But is it an epidemic? Are we really living in a minefield of killer products?

The answer to both questions is no, but it sure seems that way when considering the big names involved with recent recalls -- GM, Toyota and Johnson & Johnson.

The products we buy are actually safer than ever, but the variables for determining product hazards have become more stringent, and the climate of scrutiny for manufacturers has become perilous.

It's harder today to differentiate where legitimate hazards end and mass psychology begins because the trigger alarms for detecting compromised products are more sensitive, and, today, virtually anyone with a Twitter handle has a platform for leveling frightening charges independent of rigorous investigation by qualified parties.

Welcome to the Age of the Viral Recall. One recall can set off a chain reaction where additional ones happen simply because of the PR consequences of not recalling additional products.

It often goes like this: Consumers have a problem with a product, report it to authorities, and set up social media accounts to stalk manufacturers. Others quickly join in. Next, investigative reporters track social media and call the company to ask why they aren't recalling the product. The Consumer Product Safety Commission gets similar calls and begins circling the manufacturer. At this point, the company, finding it increasingly difficult to explain why a recall isn't justified, begins to entertain a strategy of over-compensation: Recalling more products than is necessary with the hope of appeasing the Recall Furies.

As I wrote in my book "Glass Jaw" (which is about defending reputations in today's scandal environment), "if the company recalled Product A because of reports of a foul odor, how could it, in this pressure cooker, not recall Product B after receiving similar complaints." Inevitably, pundits are invited onto news programs to declare that the company has botched the handling of the recalls, which further emboldens the Furies.

The over-compensation strategy is rarely rewarded with a cessation of hostilities. On the contrary, in this metastatic climate, regulators, legislators, activist organizations, bloggers, plaintiffs' lawyers, competitors, labor unions and short sellers -- active investors in crisis creation -- only win when things get worse, not better.

Many of today's recalls surely have a basis in legitimate hazard, but the actual level of hazard is aggravated by other variables:


• The Food and Drug Administration now has the subjective power to decide if a company is in control of its manufacturing process;

• The assertion of Consumer Reports' Jake Fisher that, "We have reliability data going back many years, and actually today's cars are safer than they ever have been. What this is means is more scrutiny of these vehicles. And if there are problems, they're trying to attack them with a lot more attention than they ever have before";

• Manufacturers are now "using a single supplier for a large number of parts... So now what happens if you do end up with a defect of some sort, the multiplier effect is much greater," according to engineer Larry Dominique formerly of Nissan.

• New technology measures adulterants in "parts per billion," which means both the government and companies are hypersensitive to even the most microscopic contaminants even if they don't pose hazards;

There is no gold standard for product recalls. Did Johnson & Johnson, over-praised for its crisis management prowess after the 1982 Tylenol cyanide tamperings, suddenly become a worse company between 2009 and 2012 when it endured more than 30 recalls and was fined $2.5 billion? No: The rules changed.

The Toyota recall of 2010 has not been hailed as an exemplary case largely because of all of the terrible news coverage, but perhaps it should be. The company was somewhat vindicated of charges of "sudden acceleration" by no less than NASA, but the media barely covered this aspect of the story, instead focusing on cinematic moments like CEO Akio Toyoda's Congressional testimony in stilted English and a $1.2 billion fine from the federal government. A few short years after the recall, Toyota sales were up more than 70 percent. In my book, that's a big win.

After a sales rally, the second best outcome of a product recall is boredom. That is, it happens quickly and methodically and, after an initial burst of publicity, nobody really cares. If you check your daily newspaper, you will often find a section that lists products being recalled. And the next day -- poof -- the listing is gone. This, combined with a true fix, is about as good as it gets.

Stuart Dezenhall contributed to this report.

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