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New U.S. Consumer Complaint Site To Hurt Small Biz?

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By Minara El-Rahman on January 13, 2011 5:50 AM

You know how people can rate a business on websites like Yelp.com? Well, the U.S. Consumer Product Safety Commission (CPSC) is about to create a government-operated site similar to Yelp.

The CPSC is planning to make its database of consumer complaints available on March 11 at http://www.saferproducts.gov/, Reuters reports.

The CPSC will now make thousands of these consumer complaints publicly accessible.

While this may have consumers cheering, small businesses may have reason to be concerned. Small businesses may find erroneous consumer complaints that have no merit being posted in the new product safety database. Small businesses are also worried that company trade secrets could be exposed. "A competitor could paint a competitor as a bad actor by throwing complaints at them without having any substance at all," Wayne Abernathy, of the American Bankers Association, told Reuters.

The law firm Alston & Bird has already warned its clients in an advisory note that the new database can open up their liability: "Plaintiffs and their lawyers may point to reports of harm, whether accurate or not, as establishing notice that a product was dangerous or as 'evidence' that a product caused injury." In addition, the law firm warned against possible tarnishment by competitors.

While these are legitimate concerns of small businesses, the CPSC claims that there are procedures that will be in place in order to prevent these things from happening. Small businesses would be able to respond to complaints 10 days prior to the complaints being posted in the product safety database. Companies can also post rebuttals alongside the complaints in the database. The database will include complaints about product reliability, and pertinent information about severe defects that could lead to injury or death, the Sacramento Bee reports.

Finally, the new database will only contain CPSC regulated products. This means that the product safety database will not contain consumer complaint reports on items such as cosmetics, food, tobacco, and other items handled by other federal agencies.

Small business owners would be wise to keep track of complaints lodged on this new government website.

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