More than 43 percent of food product recalls are triggered by mislabeling. And although the need for accurate labeling might seem obvious, the FDA has initiated stringent new regulations that aren’t readily apparent. What’s worse is that many insurance policies don’t adequately address mislabeling liabilities. Here are five important facts every food producer should know:
- Simple production errors trigger recalls. This includes torn, folded or smudged labels, even if only a handful are illegible or misleading. This can prompt an FDA recall. The errors don’t need to be widespread, either, just enough to compromise health standards.
- Legal should review all labels. It’s an added step, but before each label goes into production, a food product attorney should ensure that the label accurately complies with all new regulations and standards, including lesser known issues such as food origin. In some cases, initiating a standard legal review can even lower insurance premiums.
- Trademark issues can trigger a recall. The U.S. Supreme Court ruled that in addition to FDA regulations, food companies must also comply with the Lanham Act, which addresses various trademark issues and false advertising. This new standard is expected to further escalate the risk of private party lawsuits.
- Mislabeling lawsuits are on the rise. Look no further than Dannon, which served up $45 million a few years ago in a class-action case, after it emblazoned the phrase “clinically proven” on its Activia yogurt containers. The courts are growing increasingly more punitive. Phrases like “all natural” and “trans-fat free” are prime
- Not all insurance policies are the same. Many food and beverage policies don’t address basic recall-associated losses, such as business interruption and reputational control. The rules are changing every day, so enlist a food and beverage risk expert who knows the landscape as well as your speciﬁc liabilities.