How to handle product liability claims

Q. I am a new customer Service Supervisor for a small company and I’ve discovered that the plant does not have a plan in place for how to respond to product liability complaints and claims from customers. Can you point me toward resources for handling these situations?



Myra’s answer to: How to handle product liability claims

Frontline customer service representatives are the greatest influence in keeping product complaints from becoming product claims. 

It’s absolutely true. Your customer service representatives are the first line of defense against product liability claims and their carefully planned response and diligent handling of the complaint can keep the issue out of court.  

From the first moment you and your team realize you’re dealing with a product liability complaint, there are four things you need to do, right off the bat and I’ll walk you through each of them step-by-step. 

1. Log all complaints. Product liability complaints must be documented completely with verbatim comments from both the customer and the customer service representative. If you use a contact management system to track complaints, this is where you’ll want to capture the product liability complaints. In addition to complete documentation, you’ll need to archive the data for at least three years. If you don’t have a sophisticated complaint tracking system, document the complaint completely in writing.

2. Get complete information from the customer. Attorneys have found that the first description of the incident by the consumer tends to be the most truthful and least calculated. So get as much detail on what happened and exactly how the incident occurred as you possibly can during the initial phone call with your customer. You need to know this: Information obtained by you from the customer may serve as impeachment evidence if the consumer later changes their story – so be sure to get as much information as you possibly can. Capturing this data with complete accuracy is CRITICAL.

3. Disseminate complaints to Quality Assurance and Legal departments. Every product liability complaint needs to be escalated for review and investigation by your Quality Assurance and Legal Departments. Your Quality Assurance Department needs the complaint data so they can improve the product, or at the very least research the problem. Your Legal Department needs this data so they can initiate their investigation before notice of a claim is given. (Note: Many contact management systems will automatically do this when a specific category is selected).

4. Resolve the complaint immediately. The faster the resolution, the lesser the chance of the customer suing the company.

Do these four simple things whenever you’re faced with a product liability complaint and you will have captured everything your organization will need to investigate the claim and protect the organization from a product liability lawsuit.

Additionally…when you know what not to say to consumers in product related complaints, you can help keep your company out of court, or at least avoid making damaging admissions that may harm the company’s chance of defending the claim. In part 2 of my Managing Product Liability Claims article, I will help your company manage product liability risks by learning exactly what not to say when faced with product liability complaints.

Here are three reasons avoiding damaging admissions is critical:

A. What you tell the consumer may be admissible into evidence in court before a jury.

B. Admitting or acknowledging fault (verbally or in writing) without the opportunity to investigate, may preclude the company from denying liability later on, regardless of what the investigation shows.

C. You can be called as a witness for deposition or trial and asked about what you said to the consumer and why you said it.

Here’s what not to say:

1. “I knew this was a problem in the past, but I thought it was corrected.” Do not admit the existence of a defect.

2. “WOW! You’re the sixth person I’ve talked to this month with this problem.” – This is damaging for obvious reasons.

3. “Making the changes you suggest would drive up the cost of the product to our customers.” This shows that the company values money over safety. If jurors sense this, they are much more likely to award punitive damages against you.

4. “Don’t worry. We’ll take care of everything.” What if your investigation ultimately exonerates you – but you’ve told the customer you would ‘take care of everything’? Also, your insurance policy may require you to refrain from making any payment or promise to pay without the insurer’s consent. Be circumspect in making verbal commitments.

5. “I am so shocked that his happened again.” This comment may imply that you have been on notice of a product problem. If the company has failed to adopt remedial measures, this could spawn on a punitive damages claim against your company.

The bottom line here is: Do not accept responsibility.