Regulating Product Recall Compliance in the Digital Age: Evidence from the “Safe Cars Save Lives” Campaign

Abstract

The unprecedented number of product recalls in recent years and subsequent low consumer recall compliance raise questions about the role of regulatory agencies in ensuring safety. In this study, the authors develop a conceptual framework to test the impact of a regulator-initiated digital marketing campaign (DMC) on consumer recall compliance. The empirical context is the launch of a nationwide DMC by the U.S. automobile industry’s regulator. The analysis utilizes recall completion data from 296 product recalls active both before and after the DMC’s launch. The results show that the DMC improves consumer recall compliance. In the first four quarters after it was introduced, the DMC increased the number of vehicles fixed, on average, by 20,712 per recall campaign over what would be expected without the DMC. Regarding boundary conditions, the study finds that the DMC is more effective for recall campaigns with greater media coverage and for those with older recalled products. However, the DMC’s effect weakens as the time needed to repair a defective component increases. The findings should help regulators make compelling cases for greater resource allocation toward digital initiatives to improve recall compliance.