Can You Get a Refund for Product Recalls?

Product recalls happen relatively often across a range of industries. Despite that, many American customers are still unsure what it means for them and what rights they have as a consumer.

Newsweek breaks down what is involved and how to receive a refund.

What is a product recall?

Companies issue recalls when something has gone wrong in the manufacturing process, which means their products are faulty or even dangerous.

Companies must remove those items from sale and contact their customers to retrieve the products that have already been sold in stores or online. In some cases, the manufacturers will then work to repair the products to return them to their owners.

There were some 32 million recalls from 2018 through 2022 in the auto industry, including internal combustion engines and electric vehicles (EVs). Many of those cars were subsequently fixed. In most cases, drivers received a letter from the dealer informing them about the recall that then urged them to drop their car off for a free repair or part replacement.

But far more common are the recalls affecting food.

What is a food recall?

Food recalls are usually issued if there are concerns that a product may be dangerous to consumers.

Inspectors often discover problems during manufacturing, such as mislabelled products failing to disclose allergens, which triggers the need for a recall.

The Food and Drug Administration usually shares the warnings. The agency explains on its website that when "a company announces a recall, market withdrawal, or safety alert, the FDA posts the company's announcement as a public service."

Last month, cooks were warned of a ground beef recall hitting thousands of pounds of meat amid fears that it may be "contaminated with a foreign object." Earlier this year, some 50,000 pounds of sausage products were recalled when inspectors announced they could be infected with a potentially deadly bacteria.

Can I get a refund for a product recall?

The details of each recall will be made clear by the company recalling each product; consumers will be informed what steps they need to take as a result.

A car recall, for instance, will typically involve repairs to fix any issues, and consumers are unlikely to be offered the option of a refund in that case.

However, food recalls frequently include a request for the customers to return the product to the place of purchase, where they will be issued a refund. The stores should have been made aware of the recall by the company involved.

Just after Thanksgiving, the FDA flagged an "urgent food recall" when manufacturers discovered some of their raspberry cookies actually contained hazelnuts instead—a potentially deadly mistake for those allergic to nuts.

The agency also publicized a Christmas food alert after a labeling error saw milk chocolate used for what should have been dark chocolate coins. In both those cases, customers were urged to return the products to the store for a refund.

Many companies, especially larger firms, purchase special insurance to help cover their costs in the advent of a recall.

Manufacturers typically purchase product recall insurance in industries such as foods and beverages, toys, and electronics. The insurance helps them cover customer notification alerts, shipping, and disposal costs.