What Rules Apply When My Small Business Sells Products?

By Bill Stilwell · Last reviewed October 17, 2026

The short answer

If you sell physical products, you have duties around safety, labels, warranties, and recalls. The Consumer Product Safety Commission (CPSC) says manufacturers, importers, distributors, and retailers must report certain product hazards within 24 hours of learning about them. Federal law doesn’t make you offer a written warranty, but the Federal Trade Commission (FTC) says if you do, it must follow the Magnuson-Moss Warranty Act. Food, drugs, cosmetics, and some other products have their own agencies and rules.

What this means

Safety and reporting. The CPSC oversees most consumer products. It says a business must report within 24 hours when it gets information that a product could have a defect creating a substantial risk of injury, could create an unreasonable risk of serious injury or death, or doesn’t meet a CPSC safety rule. This applies even if no one has been hurt yet. If you’re truly unsure, the CPSC allows a short investigation, generally no longer than 10 working days. Its advice is “when in doubt, report.”

Labels. Products may need labels for warnings, contents, country of origin, or care instructions. Children’s products have extra rules. Food, cosmetics, and drugs are regulated by the Food and Drug Administration (FDA). Check the agency for your product type.

Warranties. The FTC’s guide to federal warranty law says:

You don’t have to offer a written warranty.
If you offer one on a consumer product costing more than $10, it must be labeled “full” or “limited.”
For products costing more than $15, the warranty must be available for customers to read before they buy.
If you offer a written warranty, you can’t disclaim implied warranties. A limited warranty can limit them to the warranty’s length.
You generally can’t require customers to use a certain brand of parts or service to keep the warranty, with some exceptions.

Your own warranty terms are covered in 11.1.9 Warranty.

Recalls. If a product must be recalled, the CPSC works with the business on a plan to notify customers and fix, replace, or refund the product. Returns and recall steps are covered in 26.2 Shipping, Returns, and Recalls.

Made-up example: Bright Den Candle Co. sells candles online and at markets. A customer reports a jar cracked and caught a table on fire. The owner stops selling that batch, saves the photos and order details, and calls the CPSC the same day to ask about reporting. She also reviews her warning labels.

Why it matters

Injuries. Unsafe products hurt people.
Penalties. The CPSC says failing to report can bring substantial civil or criminal penalties.
Lawsuits. Product injury claims can be large. Insurance matters here (see 10.8.10 Industry-Specific Coverage).
Warranty disputes. Unclear or illegal warranty terms lead to complaints and FTC trouble.
Reputation. Recalls and complaints are public.

Who this applies to

Makers and importers of products
Online stores, retail shops, and market sellers
Distributors and wholesalers
Service businesses that sell or install products, like appliance installers or pool supply businesses

Pure service businesses that never sell products can mostly skip this, though warranty rules may still affect any written guarantee on your work (see 11.3.3 Guarantees).

How to do it

List every product you sell and who made it.
Find the agency for each product type. CPSC for most consumer goods, FDA for food, drugs, and cosmetics, and others for special products.
Check safety rules and labels for each product. Ask suppliers for test reports or certificates when rules require them.
Decide whether to offer a written warranty. If you do, follow the FTC’s rules on labeling and pre-sale availability.
Set up a complaint log that tracks every injury report, damage report, or safety complaint.
Write a simple reporting rule: who reviews safety complaints and who decides to contact the CPSC, within 24 hours.
Keep batch or lot records so you can tell which customers got which product if a recall happens.
Add product rules to your requirement matrix (see 9.3 Requirement Matrix).

What proof to keep

Product list with suppliers
Test reports and certificates from suppliers
Copies of labels and warranty terms
Complaint and incident log
Any CPSC reports and responses
Sales records by batch or lot

Common mistakes

Assuming only manufacturers have to report. The CPSC says retailers and distributors must report too.
Waiting for a second complaint before acting.
Calling something a “full warranty” without meeting the FTC’s conditions.
Voiding a warranty because a customer used another brand of parts.
Not keeping batch records, which makes a recall much harder.

When to get help from a pro

An attorney or product compliance specialist is worth it if you make or import products, sell children’s products, or get a safety complaint. Questions to ask:

Which safety rules and labels apply to my products?
Do I need testing or a certificate before I sell?
Does this complaint need to be reported, and how?

Bill’s note

[Bill: add a short opinion. For example, what product sellers you’ve worked with learned about warranties or labels, or how a safety complaint should be handled before it becomes a review.]

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: whether SiteSmarty sells any physical products]
[What it cost and how long it took:]
[What surprised me or what I’d do differently:]
[Screenshot or photo to add, with private info blurred: the requirement matrix row for product rules]
[Result so far:]

Questions people ask

Do I have to report a dangerous product? Yes, if you have information suggesting a product could be defective and dangerous, or breaks a safety rule. The CPSC says report within 24 hours.

Do retailers have to report too? Yes. The CPSC says manufacturers, importers, distributors, and retailers all have reporting duties.

Do I have to offer a warranty? No. Federal law doesn’t require a written warranty. If you offer one, it must follow FTC rules.

What is the difference between a full and limited warranty? A full warranty must meet several FTC conditions, such as free repair and a refund or replacement if repair fails. Anything less must be called limited.

What happens in a product recall? The business works with the CPSC on a plan to tell customers and repair, replace, or refund the product.

Audit check

Question: Does the business know the safety, labeling, warranty, and reporting rules for every product it sells, and does it follow them?
Pass looks like: Product list with agencies and rules. Labels and warranty terms that follow the rules. Complaint log in use. Clear 24-hour reporting process. Batch records kept.
Fail looks like: No product list. Warranty mislabeled. Safety complaints ignored. No way to trace who bought what.
Evidence to collect: Product list, labels, warranty text, complaint log, supplier test reports, and sales records by batch.

Where this fits

Do this first: 9.3 Requirement Matrix, 9.5.1 Federal Permits

Do this next: 9.6.3 Construction Requirements

Sources

Consumer Product Safety Commission (CPSC), "Duty to Report to CPSC: Rights and Responsibilities of Businesses" (checked October 17, 2026)
Federal Trade Commission (FTC), "Businessperson's Guide to Federal Warranty Law" (checked October 17, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.