CPSC's 24-Hour Reporting Rule: What to Report and What Insurance Covers

Your customer service team logs a third complaint that your space heater's housing got hot enough to warp. Engineering wants to pull units and run tests before anyone calls it a defect. That instinct feels responsible. Under federal law, it may already be too late, because the clock to tell the Consumer Product Safety Commission may have started with the first complaint.

Who has to report

Section 15(b) of the Consumer Product Safety Act (15 U.S.C. 2064(b)) puts the reporting duty on manufacturers, distributors, and retailers of consumer products. Under the Act, importers count as manufacturers. That means a duty runs to everyone in the chain, not only the company that built the product, and a private-label brand or importer can't assume its overseas factory will handle it. If you sell under your own name, read our posts on the apparent manufacturer rule and private label vs. white label.

What triggers a report

You must report when you obtain information that reasonably supports the conclusion that a product:

• fails to comply with a consumer product safety rule, or with a voluntary standard the CPSC has relied on;
• fails to comply with another rule, regulation, standard, or ban the CPSC enforces;
• contains a defect that could create a substantial product hazard; or
• creates an unreasonable risk of serious injury or death.

The standard is "reasonably supports," not "proves." The CPSC's regulations say a firm should not delay reporting to determine to a certainty that a reportable problem exists, and a firm need not wait for complete risk estimates. Filing is also not a confession. Under 16 CFR 1115.12(a), you need not admit, and may specifically deny, that the information shows a defect.

The 24-hour clock

The statute says report "immediately." The CPSC's rule at 16 CFR 1115.14 defines that as within 24 hours of obtaining reportable information. Three details make the clock tighter than it sounds:

• Knowledge is imputed. Information held by any official or employee capable of appreciating its significance can be attributed to the company. The rule treats five days as the maximum reasonable time, under ordinary circumstances, for that information to reach the CEO or the person responsible for reporting.
• Investigation is short. If information is genuinely unclear, you may investigate, but generally for no more than 10 days unless you can show a longer period is reasonable. After that, the CPSC treats you as knowing what a diligent investigation would have found.
• The clock can run during the investigation. Once you have enough to reasonably support the conclusion, the 24 hours start, even if testing isn't finished.

The CPSC's own business guidance puts it in four words attributed to agency staff: "when in doubt, report." Its Recall Handbook adds that because a product can be defective even when it is designed, made, and marketed exactly as intended, a company in doubt about whether a defect exists should still report.

Lawsuit reporting under Section 37

A separate duty applies to manufacturers under Section 37 (15 U.S.C. 2084). If a particular model is the subject of at least three civil actions alleging death or grievous bodily injury, and each ends in a final settlement or a judgment for the plaintiff within the same 24-month period, the manufacturer must report to the CPSC within 30 days after the third one. A product liability defense strategy built around quiet settlements can trigger this duty without anyone noticing.

What late reporting costs

Failing to report is a prohibited act, and a knowing violation, which includes what a reasonable person exercising due care would have known, carries civil penalties. Under 15 U.S.C. 2069, the maximums, adjusted for inflation, are $120,000 per violation and $17,150,000 for a related series of violations, effective January 1, 2022. The statute requires the CPSC to publish the next adjustment by December 1, 2026, for violations after January 1, 2027. As of mid-November 2026, it had not yet appeared in the Federal Register. Knowing and willful violations can also be prosecuted criminally, with possible imprisonment of up to five years, fines, and asset forfeiture, and individual officers and directors can be charged.

The CPSC uses these powers. In August 2026, a treadmill company agreed to a $16.875 million civil penalty after receiving at least 874 reports of unexpected speed changes or stops, including at least 71 injury reports, before a 2022 recall. In June 2026, a maker of packaged terminal air conditioners agreed to $8.5 million and an internal compliance monitor over a fire hazard it learned of through warranty claims and fire reports. Both settlements were provisionally accepted subject to public comment, and both required years of compliance reporting.

The gotcha: waiting for engineering certainty

This is where well-run companies get penalized. Engineering treats "is it defective?" as a question to answer completely before acting. The law treats it as a question you report on once the information reasonably points there. The 24 hours can start when complaints, warranty returns, or incident reports reach someone capable of appreciating them, not when the root-cause analysis is signed. Penalty cases tend to read the same way: incidents piling up, internal fixes made quietly, and a report filed months or years later. Build a process that moves safety information to your reporting official within days, not quarters, and talk to your attorney before you need to decide, not after.

There is an upside to moving fast. Under the CPSC's Fast Track program, a firm that reports and is ready to implement an acceptable voluntary recall within 20 working days avoids a staff preliminary determination that the product presents a substantial hazard. Fast Track doesn't erase the reporting deadline, but it rewards the companies that meet it.

What insurance covers, and what it doesn't

• Product liability pays bodily injury and property damage lawsuits from the hazard, plus your defense.
• Product recall insurance pays first-party recall expense: notification, retrieval, disposal, replacement, and often lost profit. Some policies also pay a retailer's or customer's recall costs through a third-party recall extension.
• Defense of the CPSC process itself is a gray area. General liability defends "suits" seeking damages, and an agency investigation usually isn't one. Some recall policies include crisis-management or regulatory-response sublimits that may help, but wording varies widely.
• Civil penalties are generally excluded and, in many states, uninsurable as a matter of public policy. The cost of reporting late stays with you.

Our approach

At Cory Washington & Co., we build product programs for makers and sellers who live under the CPSC's rules, including power and hand tool, outdoor power equipment, portable power equipment, and ladder, scaffold, and aerial lift manufacturers. We pair product liability with real recall limits, check whether third-party recall and regulatory-response costs are included, and make sure you know which costs no policy will carry.

Selling a product the CPSC regulates? Request a policy review and we'll show you where your program stands.

Frequently Asked

This article is general information for business owners, not insurance or legal advice, and does not bind or alter coverage. Policy terms, eligibility, and pricing vary by carrier and state — confirm specifics with our licensed team before making decisions.