Yes it is an official recall, it's a safety issue because if the module gets wet it can kill the trailer lights, that's where the safety part comes in.
Here is the actual text from alldatadiy.com:
Recall 99E012000: Trailer Hitch Kit Converter Shorting
Equipment Description: Towing hitch kits and aftermarket trailer towing wire harness converters for use on 1998-1999 Lexus LX470, and Toyota Land Cruisers. Due to inadequate waterproofing performance and improper installation location of the converter, which is mounted on the exterior of the vehicle, an electrical short circuit could occur if water enters the converter housing. The short circuit can cause a failure of the converter, and if a trailer is being towed at the time, can also cause failure of the trailer lights.
Dealers will replace the converter.
Owner notification began May 17, 1999. Owners who take their vehicles to an authorized dealer on an agreed upon service date and do not receive the free remedy within a reasonable time should contact Toyota at 1-800-331-4331. Also contact the National Highway Traffic Safety Administration's Auto Safety Hotline at 1-888-DASH-2-DOT (1-888-327-4236).
Note: I like the last part, basically if a dealer tries to screw you, Toyota corporate wants to know...kinda cool.