Product Recall Checklist For Online Stores

Finding out a product might be unsafe is stressful, especially when orders have already gone out and customers are spread across New Zealand.

If you run an online store, a recall isn't just a warehouse problem. You'll need to think about customer records, supplier contracts, refund wording, privacy rules and the documents you keep if a regulator, insurer or supplier asks what happened.

The good news is that a recall can be managed calmly if you know the order of steps. Here is a practical product recall checklist for New Zealand online stores.

Do Online Stores Have To Run A Product Recall In New Zealand?

Yes, if a product is unsafe or may cause injury, you need to act quickly, even if the defect came from your supplier or manufacturer.

Under the Fair Trading Act 1986, New Zealand has product safety rules that can apply to consumer goods, including product safety standards, unsafe goods notices and compulsory recall powers. The Commerce Commission can take enforcement action for Fair Trading Act breaches, and the Minister of Commerce and Consumer Affairs can require a mandatory recall in serious cases.

Many recalls are voluntary. That means you, your supplier or the manufacturer identifies the risk and starts recalling the product before a regulator orders it. If you start a voluntary recall because goods will or may cause injury, you generally need to notify MBIE's Product Safety team within 2 working days after the recall begins.

A recall may be needed where a product:

• breaks in a way that creates a choking, burning, electrical, chemical or injury risk
• doesn't comply with a mandatory product safety standard
• has incorrect safety instructions, warnings or ingredient information
• has contamination or batch issues
• has a defect that only appears after normal use

For online sellers, the key point is this: you can't simply tell customers to contact the manufacturer and step away. If you sold the product to the customer, your business is usually the first place the customer will come back to.

What Should You Do First When You Find A Defect?

You should first stop further sales, secure the stock and work out whether the issue is a safety risk, a quality issue or both.

It can be tempting to wait until you have every answer. Don't. Your first job is to stop the problem getting bigger while you gather the facts.

First 24 Hours Checklist

1. Pause sales: take the product off your website, marketplaces and paid ads while you investigate.
2. Quarantine stock: separate affected units in your warehouse or 3PL and mark them clearly as not for sale.
3. Identify the product: record the SKU, batch number, model, supplier, date range, purchase orders and sales channels.
4. Collect evidence: save customer complaints, photos, videos, testing reports, supplier emails and internal notes.
5. Assess the risk: consider who may be harmed, how serious the harm could be and how likely it's to happen.
6. Contact your supplier: ask for batch details, testing documents, product specifications, proposed remedy and whether they have notified regulators overseas.
7. Decide on next steps: choose whether to issue a safety notice, start a voluntary recall, offer refunds, repair units or replace products.

Keep one internal recall log from day one. It should show who made each decision, when they made it, what information they relied on and what was sent to customers. This can be very useful if your supplier later disputes responsibility under a supplier agreement or your insurer asks for proof of what you did.

What Does New Zealand Consumer Law Require During A Recall?

It depends on the defect, but the Consumer Guarantees Act 1993 and the Fair Trading Act 1986 are usually the main laws for online product recalls.

The Consumer Guarantees Act says goods supplied to consumers must be of acceptable quality. That includes being safe, durable, free from minor defects, fit for purpose and acceptable in appearance and finish, taking into account things like price, description and any claims made about the product.

If the problem is minor, you may be able to choose whether to repair, replace or refund. If the failure is serious, the customer can usually reject the goods and choose a refund or replacement. A serious failure can include where a reasonable customer wouldn't have bought the product if they knew about the defect, or where the goods are unsafe.

The Fair Trading Act also matters because your recall messages, website notices and refund statements must not mislead customers. For example, avoid saying:

• refunds are only available as store credit if customers are legally entitled to money back
• the recall is only a precaution if you already know there's a real safety risk
• customers must pay return shipping where that would make the remedy unfair in the circumstances
• the issue affects only a small number of products unless you can support that claim

If there's a genuine safety issue, you may also need to notify MBIE within the 2 working day timeframe mentioned above. If you're unsure whether the issue reaches that level, get tailored Consumer Guarantees Act advice quickly rather than waiting until the situation is public.

How Should You Contact Customers And Handle Refunds?

You should contact customers directly where you can, keep the message simple and make the remedy easy to use.

Your customer database is one of your most useful recall tools. If you sell through your own website, you may have names, emails, phone numbers, order dates and addresses. If you sell through a marketplace, you may need to work with the marketplace's recall process to reach customers.

Under the Privacy Act 2020, you should only use personal information for a proper purpose. In most cases, using order contact details to send a safety recall notice will be connected to the original customer relationship. If the risk is serious, privacy law also recognises that information may need to be used or disclosed to prevent or lessen a serious threat. Still, keep the notice focused on the recall and don't turn it into marketing.

A good recall message should include:

• the product name, photo or identifying details
• affected batch numbers, order dates or model numbers
• the safety issue in plain English
• what the customer should stop doing immediately
• whether they should return, dispose of or stop using the item
• the refund, repair or replacement available
• how you'll cover return shipping or collection
• a contact email or phone number for recall questions

Say Aroha runs an online baby products store. She sold 500 silicone teething toys at $24.90 each, including shipping. Her supplier tells her batch BT-2401 may split into small pieces. Aroha pauses sales the same day, identifies 380 customers from her Shopify records, asks a marketplace to contact another 70 buyers and checks that 50 units are still with her 3PL.

She starts a voluntary safety recall, notifies MBIE within 2 working days, emails and texts customers, offers a full $24.90 refund or replacement from a safe batch, and gives customers a prepaid return label. Her recall log tracks each order, contact attempts, refunds issued and returned stock. That record helps her recover costs from her supplier under their product supply agreement.

What Should Be In Your Supplier Contracts?

Your supplier contracts should clearly say who pays for recall costs, who controls customer messaging and what information your supplier must give you.

For many online stores, the recall risk sits in the gap between what customers expect from you and what your supplier is willing to cover. If your contract is silent, you may still need to refund customers quickly, but then struggle to recover the cost from the supplier later.

Useful supplier contract clauses include:

• Product compliance: the supplier promises the goods meet New Zealand laws, mandatory standards and your specifications.
• Testing and certificates: the supplier must provide test reports, batch records and compliance documents when requested.
• Notice of defects: the supplier must tell you immediately if it becomes aware of safety issues, overseas recalls or regulator concerns.
• Recall cooperation: the supplier must help with investigations, customer notices, replacement stock and regulator information.
• Cost allocation: the supplier covers recall costs caused by its defect, including refunds, shipping, disposal, testing and reasonable admin costs.
• Indemnity: the supplier protects your business for losses linked to defective or non-compliant goods, where appropriate.
• Insurance: the supplier maintains product liability insurance and gives you proof on request.
• Record keeping: the supplier keeps batch, traceability and production records for a set period.

If you import products, these clauses matter even more. Overseas suppliers may not understand New Zealand consumer law, and you may be the easiest business for customers and regulators to contact. Get the contract right early so you're not negotiating responsibility in the middle of a recall.

Recall Policy Template: What Should You Include?

A recall policy should set out who does what, when and how, so your team isn't making it up under pressure.

A product recall response plan or free recall policy template can be a useful starting point, but it won't know your products, sales channels, suppliers, warehouse setup or customer data systems. Before you use it, a lawyer should tailor it to your business and your risk profile.

Here is a practical outline for a recall policy for a New Zealand online store:

1. Purpose: explain that the policy covers product defects, unsafe products, customer notices, refunds and regulator notifications.
2. Roles And Responsibilities: name the person responsible for recall decisions, customer support, supplier contact, warehouse stock and records.
3. Trigger Events: list what starts the process, such as customer complaints, test failures, supplier alerts, injury reports or overseas recalls.
4. Risk Assessment: set out how you assess severity, likelihood, affected customers and whether expert testing is needed.
5. Sales Pause And Stock Control: explain how products are removed from your website, marketplaces, ads, warehouse shelves and fulfilment queues.
6. Customer Communications: include what details must go in emails, SMS messages, website notices and marketplace notices.
7. Refund, Repair Or Replacement Process: state how remedies are approved, processed and recorded under the Consumer Guarantees Act.
8. Regulator Notification: explain when MBIE notification may be required, including the 2 working day voluntary safety recall timing.
9. Supplier And Insurer Notifications: set out who contacts suppliers, what evidence is requested and when insurers are told.
10. Records And Review: list the recall log, customer contact records, refund reports, returned stock records and lessons learned after closure.

Your policy doesn't need to be long. The best version is usually a clear internal playbook your team can actually follow on a busy day.

Key Takeaways

• If a product may be unsafe, pause sales, quarantine stock and start a written recall log straight away.
• New Zealand online stores need to think about the Fair Trading Act, Consumer Guarantees Act, Privacy Act and MBIE product safety notification process.
• If you start a voluntary safety recall because goods will or may cause injury, MBIE generally needs to be notified within 2 working days.
• Customer messages should be clear, accurate and focused on safety, not marketing.
• Supplier contracts should cover recall costs, batch records, testing documents, cooperation and indemnities.
• A recall policy template should be tailored to your products, sales channels, suppliers and customer database.

If you'd like help with your supplier contracts, recall policy, customer refund wording or privacy-compliant customer notices, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.