CONTENTS
- 1. Recall | The Concept and How It Differs from a Safety Investigation
- - How a Safety Investigation Differs From a Recall
- 2. Recall | The Standard That Triggers It
- - Distinguishing the Types
- 3. Recall | Procedure and Review Standards
- - The Stages of the Process
- - Review Standards Applied by the Supervising Agency
- 4. Recall | Legal Liability for Noncompliance
- - Criminal Liability
- - Administrative Sanctions and Administrative Fines
- - Civil Liability and Practical Risks
- 5. Recall | Why Legal Counsel Is Needed
- - Support From the Corporate Legal Group
1. Recall | The Concept and How It Differs from a Safety Investigation
A recall refers to a system under which, when a defect in a product's manufacture, design, or labeling causes or threatens to cause harm to a consumer's life, body, or property, the business that manufactured, imported, or distributed the product voluntarily, or pursuant to an order from an administrative agency, retrieves the product and takes measures such as repair, replacement, or refund.
The recall system is based on the 「Framework Act on Consumers」 and, depending on the type of product, is operated in detail under individual statutes such as the 「Framework Act on Product Safety」, the 「Pharmaceutical Affairs Act」, and the 「Food Sanitation Act」.
The recall system does not apply uniformly to all products. Instead, it is operated separately by item, such as pharmaceuticals, food, and automobiles, under individual statutes.
How a Safety Investigation Differs From a Recall
To understand a recall, you first need to draw a clear line between it and a safety investigation.
• Recall : the stage at which the product is actually retrieved and remedial measures are carried out once that investigation confirms a defect
In short, a safety investigation is the assessment phase, while a recall is the execution phase.
2. Recall | The Standard That Triggers It
A recall requires both a “legal defect” and a “likelihood of harm” to be recognized at the same time.
Under the framework of the Framework Act on Product Safety, two elements are central.
• Harm that has occurred or that is likely to occur
Here, “likelihood” is construed fairly broadly, so a product may become subject to a recall even where no actual accident has taken place.
Distinguishing the Types
Recalls are classified by whether a company acts on its own judgment and whether an administrative agency becomes involved, and a company's response obligations and legal risks vary with each type.
Type | Description |
Voluntary recall | The company identifies the defect on its own and carries out the recall |
Recommended recall | An administrative agency recommends action on the ground of a likelihood of harm |
Ordered recall | An administrative agency compels action on a statutory basis |
A voluntary recall is a proactive response in which the company identifies the defect on its own and carries out the recall.
A recommended recall carries no legal compulsion, but failure to comply is likely to lead to an ordered recall, so in practice compliance is effectively expected.
An ordered recall is a compulsory measure under the Framework Act on Product Safety, and noncompliance may give rise to criminal punishment.
3. Recall | Procedure and Review Standards
Each step is interconnected with the others, and if any step is omitted or handled as a mere formality, the recall may not be recognized as complete.
A company should therefore understand the entire flow in a structured way and respond accordingly.
The Stages of the Process
The stages that matter most as the recall proceeds are the public announcement, the retrieval, and the reporting.
The public announcement must be made through a range of channels so that consumers can actually learn of the recall.
At the retrieval stage, what counts is not merely notifying consumers but whether the product is in fact recovered, so the company should secure concrete retrieval results such as refunds or exchanges.
At the reporting stage, the company must submit the outcome report together with supporting documentation, and if such materials are lacking, the recall may not be recognized as properly carried out.
Review Standards Applied by the Supervising Agency
Review item | What is verified |
Production volume | Total scale of manufacture and import |
Sales volume | Scale of market distribution |
Retrieved volume | Actual retrieval results |
Public announcement | Whether notice was carried out |
Reporting | Whether the outcome report was submitted |
One of the elements that matters most in practice is supporting documentation.
A company should keep materials organized in a systematic way, including transaction statements and tax invoices, inbound and outbound records, courier waybills, and records of text messages and emails sent.
These materials serve as the basis for proving that the product was in fact retrieved and that the announcement was made, and even if retrieval has been completed, the recall may be judged not to have been properly carried out where there are no materials to confirm it.
4. Recall | Legal Liability for Noncompliance
A recall is a legal obligation, so a company that fails to carry it out, or carries it out inadequately, may bear legal liability, including criminal liability, administrative sanctions, and the imposition of administrative fines.
Liability may expand further where, in particular, a company continues to distribute a product subject to recall or fails to properly carry out the announcement and retrieval measures.
Criminal Liability
Under the Framework Act on Product Safety, a business operator that fails, without justifiable grounds, to comply with an order issued by the head of a central administrative agency for the collection, destruction, or exchange of a product may be subject to imprisonment for up to three years or a fine of up to 30 million won.
In particular, where the operator fails to halt sales or continues to distribute a product subject to recall, intent to violate is more likely to be found, which can raise the level of punishment.
In addition, the criminal liability for violating a recall order under the Framework Act on Consumers is also defined very strictly.
A party that violates a recall order under the Framework Act on Consumers may be subject to imprisonment for up to three years or a fine of up to 50 million won.
This shows that the law punishes a violation of the “recall order” itself more heavily than noncompliance with a collection or destruction order.
Administrative Sanctions and Administrative Fines
Where the related obligations are not met, administrative sanctions may be imposed in parallel with, and separately from, criminal punishment.
• An additional order or public announcement measure where the recall is not carried out
• A ban on distribution and a restriction on sales of the product
Civil Liability and Practical Risks
Failure to carry out a recall can lead directly to consumer harm, in which case the company bears civil liability for damages.
Where a defective product causes an actual accident, that liability may extend to liability for damages under the Product Liability Act.
• Damage to the company's image from media coverage and public announcements
• Additional investigation and tighter regulation of the same or similar products
In the end, noncompliance can develop into a problem that affects the very foundation of the company's business.
5. Recall | Why Legal Counsel Is Needed
As a recall proceeds, the scope of the products to be retrieved, the method of notice, and the level of compensation can all become points of contention, and a misjudgment in this process may lead to administrative measures or claims for damages.
For products that are distributed on a large scale or that carry a high likelihood of harm, in particular, the scope of liability can vary considerably depending on how the company responds.
A company should therefore have legal review run in parallel so that its response at each stage meets the applicable legal standards.
Support From the Corporate Legal Group
The Corporate Legal Group at Daeryun Law Firm takes the full range of criminal, administrative, and civil risks that can arise in connection with a recall into account, develops a response strategy suited to the company's circumstances, and supports it through to execution.
• Reviewing the wording of notices so that no unnecessary admission of liability is made in the recall announcement, and designing the method of consumer notice and the response standards from the standpoint of legal risk
• Setting concrete refund, exchange, and repair standards when establishing the retrieval method and compensation criteria, with an eye to the possibility of future disputes
• Supporting the entire recall process, including responding to administrative agencies, preparing the outcome report, and organizing supporting documentation, so that actual compliance can be recognized
If you face difficulty in making decisions during a recall response or anticipate legal risk, you may obtain a professional review through a 🔗corporate attorney legal consultation booking.
