The growing success and popularity of private-labeled products, especially in electrical distribution, has brought with it growing concerns about product liability.

The National Assn. of Electrical Distributors' Education & Research Foundation recently released a study looking into the liability question.

“Product Liability Exposure: How to Manage and Mitigate the Risks in Today's Global Market” analyzes liability threats and recommends steps distributors can take to manage potential risks. The study was produced by Bernie Heinze, president and CEO of Sequent Insurance Group.

“The electrical products with the highest number of private labels are also those that have been the subject of recent recalls by the U.S. Consumer Product Safety Commission,” the report says.

Examples include electrical tape, wiring devices and circuit breakers. The major source of private-label products is China, which supplies 38 percent of private-label electrical products and components, the report found.

A related problem is the growing number of counterfeit products. Whether a distributor knowingly or unknowingly sells a counterfeit product, the company can face both civil liability as well as criminal penalties.

Under U.S. product liability laws, the report says, distributors can be ordered to pay the full amount of personal injury and property damage caused by electrical products, even while the manufacturer or supplier escapes penalty. Under the legal principle of “joint and several liability,” injured parties can recover the entire amount of their damages either from all of the parties found liable or alone from an individual party, regardless of the respective share of liability.

“Managing product liability exposures must be both a priority and an essential component of every electrical distributor's strategic and tactical operation,” the report says.

The report was produced with funding from the NAED Education & Research Foundation's Channel Advantage Partnership endowment, which supports research to improve the profitability and competitiveness of the electrical distribution channel.

For information, go to www.naed.org.