Do people sue very small skincare businesses for skin damage?

I'm wondering how common law suits are in skincare and if people bother to sue tiny companies. Say you're selling a 2% salicylic otc anti acne formula, which could cause some redness and peeling, or a product with an natural ingredients that could cause allergic reactions in rare cases. I'm sure most products can cause problems for some small percentage of people.

These examples seem quite low risk compared to selling say 70% glycolic acid peels.

I'm well aware that large companies get sued, but haven't heard of this happening much to tiny ones since there's not much money to take from them in the first place. Perhaps someone would ask to get dermatologist bills reimbursed, but that likely wouldn't cost much compared to the cost of insurance. Another way to phrase the question - how big do you need to be before you really need insurance?


Comments

  • Even if "just" 0.001% of customers sue
    and "just" 0.00001% win the lawsuit, you're ruined.

    So even if you're not making high-risk cosmetics:
    you can add a disclaimer like:
    'test in a small area for 48 hours before use, if irritation' happens, do not use'
      
    You can get plenty of disclaimer ideas from commercial hair dyes.
    At the end, the disclaimer just takes some extra time when designing your labels, and no extra cost.
  • I have a client who was threatened with a lawsuit by a consumer who claimed they were "burned" by my client's Hyaluronic Acid Serum ... the product only contained Water, Sodium Hyaluronate & Preservative.

    The answer to you question is:  Anyone who can convince a lawyer to file suit against you, may do just that ... the attorney's figure that you have product liability insurance on your products and they're looking for money from the insurance claim more than damages if you are a small firm.
    Chemist/Microbiologist formulating in the Organic & Naturals arena under ECOCert/Natural Products Assn/Whole Foods/National Organic Program guidelines focused skincare & haircare products. 

    Provides Formulation Development and Lab-Scale Contract Manufacturing Services.  See website for details www.desertinbloomcosmeticslab.com

  • I have always been told to get insurance just in case. It may not actually be the cream they thought they were buying. I sent a cream to a lady who is very allergic, so I thought I sent her the fragrance free cream, but it was orange blossom. Luckily she smelled first, but is an example of what can go wrong I guess!
    Dr. Catherine Pratt
    (B.Sc with HONS I , Ph.D Analytical/Organic Chem and Microbiology), Cosmetic Chemistry IPCS)
  • Limited Company with £100 capital. Then you point out to the person wanting to sue, that you can simply put the company into liquidation and they will be left with the lawyer's bills.
    Design of anti-aging creams, gels, and serums; shampoos; and therapeutic cosmetics. In-house label and box design capability.
  • Hahaaa!
    Dr. Catherine Pratt
    (B.Sc with HONS I , Ph.D Analytical/Organic Chem and Microbiology), Cosmetic Chemistry IPCS)
  • edited June 13
    All the products have disclaimers and advise patch testing, but who knows what protection that gives. OTC products have FDA mandated warnings as well.

    Thing is I've never heard of any small biz selling relatively low risk products getting sued so I wonder if this insurance thing really is necessary. I've heard of customers getting allergic reactions, but people have been happy to get their dermatologist visit covered. So I'm asking here to see if there are any "case studies".

    It doesn't make sense to sue a small business like this as you're likely to get stuck with a lawyers bill and no money. You don't get ruined if there's not anything to ruin and it's a limited liability company.

    For personal formulators you can get very cheap insurance, but it's a bit more for businesses starting at around $1400 regardless of sales numbers.

  • edited June 13
    Any person with a  lawyer can sue anyone at anytime over virtually anything.  Obviously, you have already have made up your mind that you don't want to get insurance and are looking for some reason/comfort to justify your decision.

    So, here you go:  No, you don't need insurance. I, for one, have never, ever heard of consumers suing a small skincare company because consumers know they're likely to get stuck with a lawyers bill and no money.  And, on top of that you won't get ruined.  Don't waste your money buying product liability insurance.  
    Chemist/Microbiologist formulating in the Organic & Naturals arena under ECOCert/Natural Products Assn/Whole Foods/National Organic Program guidelines focused skincare & haircare products. 

    Provides Formulation Development and Lab-Scale Contract Manufacturing Services.  See website for details www.desertinbloomcosmeticslab.com

  • edited June 13
    Isn't pharmacovigilance to report problems / side effect for a product?
  • Insurance is just the cost of doing business. I recommend that if you are serious about your business then you should get insurance.

    But as @MarkBroussard says, it sounds like you've made up your mind to not get insurance and are looking to justify that decision. It's a risk & without it you can't sell in a lot of possible distribution channels. But if you're just running your business as a hobby and have little interest in building it up, you might think the money saved is worth it.  I don't.

  • So Mark you've never heard of it happening, and Perry? 

    It seems like you are in the opposite camp trying to justify having insurance as you currently do pay for it and assuming I don't have it (I do). But everyone will try to sell you insurance for everything in the US, so it's reasonable to evaluate the actual risk, especially if you're small/just starting out etc.


  • I don’t keep up on all the goings on in the US court system & this isn’t the kind of thing I generally ask brand owners about. So no, I’ve not heard of any. However, this should not give you any reassurance. It could happen all the time or never as far as I know.

    I’ve heard from a couple of brand owners (small) who have been sued for their claims about their products being organic. They chose to settle out of court which cost them thousands of dollars.

    This is a strategy some lawyers use to make money. I could easily see them adapting the strategy to small, uninsured companies.

    I’m curious, how much money are you going to save by making a risky decision like this?

    In truth, I bet there are lots of people who sell stuff on Etsy or at Farmers Markets who don’t have insurance. I think that’s a bad idea.
  • How much does product liability insurance typically costs and how much can it cover?
  • "Another way to phrase the question - how big do you need to be before you really need insurance?"

    If you manufacture/sell skin care products that consumer put on their skin, you'd best have insurance, even if you are small.  It is simply a prudent business decision, and as Perry pointed out, without insurance many distribution channels will not even think of carrying your products.  

    As I mentioned, one of my clients was threatened with a lawsuit with the claim that the consumer suffered burns from a Hyaluronic Acid serum ... that's like claiming you were burned by water.  But, the consumer saw "Acid" was in the product and there you go ... a potential lawsuit over something that is simply impossible to have occurred.

    @Gunther:  The cost of product liability insurance depends on the product and it's likelihood of causing adverse reactions.  An AHA-containing product will cost more to insure than an all-natural moisturizer for instance.
    Chemist/Microbiologist formulating in the Organic & Naturals arena under ECOCert/Natural Products Assn/Whole Foods/National Organic Program guidelines focused skincare & haircare products. 

    Provides Formulation Development and Lab-Scale Contract Manufacturing Services.  See website for details www.desertinbloomcosmeticslab.com

  • Even if it has never happened to anyone it can happen to you.  I would suggest getting insurance.  One frivolous suit can put you out of business.
  • Insurance means that if you get somebody litigating, even unjustifiably, it'll pay to waste a lawyers time not yours

    ends up being very cheap then
    UK based, Over 20 years in Toiletries, After a 5 year sabbatical doing cleaning products, back in the land of Personal Care
  • Hey Bellassi, (this is fom a few posts ago in this thread)
    You were interpreting that I had a 'Limited Company with £100 capital ', I don't think so I had a million dollar (no thats too 80's) I had a billion corporation and then turned to my mate Warren Buffet and played around with a few investments. Now you can continue what you were sayin?....

    Dr. Catherine Pratt
    (B.Sc with HONS I , Ph.D Analytical/Organic Chem and Microbiology), Cosmetic Chemistry IPCS)
  • I haven't got insurance yet this year, however, now hearing all this, I dont think I will. I have a knew product out and if someone sued me now (Belassi) I have a less then $250 business, and I would let the lawyer know that. The problem is that small businesses pay a lot of money on advertising, branding etc to make them look like a brand that looks like Lancome, and could be sued as they have loads of money.
    Dr. Catherine Pratt
    (B.Sc with HONS I , Ph.D Analytical/Organic Chem and Microbiology), Cosmetic Chemistry IPCS)
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