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For entrepreneurs, few events are more damaging than a product recall. The immediate image is always financial: refunds, fines and settlements. But anyone who has been inside these cases knows the true cost runs far deeper. Recalls erode consumer trust, unravel years of brand building and expose systemic failures in leadership.
I have seen firsthand how these crises unfold. In nearly every instance, the warning signs were there. Companies knew about risks. Employees raised concerns. Complaints trickled in. Yet leadership chose to wait, to monitor, to hope the problem would fade. It never does. When companies delay action, injuries multiply, lawsuits escalate, and reputations are permanently scarred.
Related: Soar Above, Rather Than Survive, a Product Recall
When delay turns deadly
Consider Peloton. The company faced reports of injuries and even the tragic death of a child linked to its Tread+ treadmill. Instead of acting swiftly, Peloton resisted recalling the product. That decision led to one of the largest penalties in Consumer Product Safety Commission history. Peloton paid $19 million for failing to immediately report defects. The fine was only part of the story. The brand damage continues to ripple years later.
Onewheel, the self-balancing electric skateboard, now faces lawsuits tied to sudden stopping issues that led to consumer deaths. The legal actions are only beginning, but the company’s reputation has already been drawn into headlines that focus on tragedy rather than innovation.
Other cases may not grab as many headlines but still leave lasting scars. Ninja recalled hundreds of thousands of pressure cookers after reports of severe burns. Portable blenders were pulled from the market after blades came loose during operation. Werner ladders were recalled when they broke without warning. In every case, the cost of waiting outweighed the cost of acting early.
Lawsuits are the beginning, not the end
When a product injures a consumer, lawsuits arrive quickly. For many founders, that is the first moment they truly grasp the scale of the crisis. Litigation is costly, time-consuming and distracting, but lawsuits are not the end. They are the beginning.
From my own work in product defect litigation, I have seen how one case rarely stands alone. A single injury multiplies into dozens of filings. What begins as an isolated incident can grow into a class action. Through discovery, internal safety reports, cost-cutting memos and ignored warnings come to light. That evidence does not just determine the verdict — it drives the headlines. The reputational damage is often far worse than the financial cost.
Entrepreneurs must recognize that litigation is not just about settlements and legal fees. It is about the company’s culture being put on trial. Once a jury sees that safety took a back seat to profits, rebuilding consumer trust is nearly impossible.
Related: Companies Often Choose Profits Over Consumer Safety — Here’s What It Takes to Hold Them Acc