CPSIA – ICPHSO Update on Compliance and Field Operations

Marc Schoem moderated a discussion involving four other heads of department (he is an acting department head, too):

• Dean Woodard, Dir., Defect Investigation Div.
• Mary Toro, Dir., Regulatory Enforcement Div.
• Dennis Blasiua, Eastern District Div., Field Investigations Div.
• Kathleen Lisius, Compliance Investigator, Import Surveillance Div (standing in for the director today).

DW: This division has four teams. Fast Track Recall program does not let you off the hook for reporting violations. It does avoid a “Preliminary Determination”. This is a very “successful” and very “positive” program. Less bureaucracy and less “red tape”. “Saves lives” and “limits your exposure” to whatever issues there may have been.

[RW: It is ALSO one of the most remarkably coercive programs administered by the CPSC. You are very often, if not always, given a short period of time to decide whether to participate. By "short", this could mean HOURS to decide. Hope you are always at the ready!]

MT: Four teams based on hazard. Four team leaders and 16 compliance officers. Different backgrounds on the team, lots of tech know-how and skills. This team does a lot of advising and gives a lot of guidance to industry. Have more than double the previous total of regulations that they have to enforce. Field staff goes out to do inspections. Develop field investigation programs for the year. Now MUST report under Section 15 for a violation of a mandatory standard. [Them's a lot of reports!] All such items also have a certification requirement.

DB – Does hundreds of inspections annually. Surveys, too. Visits to consumer homes and “no one leaves in handcuffs”. [He said this in a joking manner.] Has roughly 100 investigations but gets tens of thousands of complaints annually. [RW: Now all that crap will go into the database. Can we see any issues here?] Emphasizes the politeness of his investigators. [RW: I appreciate this approach. I take him at his word.]

DB: Says we need to monitor the Internet for consumer complaints online. The CPSC is monitoring it so you better. Hmmm. DB says this may warrant investigation or spawn an investigation. More and more will send out investigators or ask for proof of destruction of recalled merchandise. Apparently, the re-export of recalled merchandise is up to Tim Geithner. [Fortunately, he's not too busy . . . .]

KL: Import Surveillance Div: Last year, not surprisingly, set a record of samples taken at port. 91% of the samples were violations, but only two products were recalled. Stopping at the port prevented the recalls. [This is interesting data. Are they clairvoyant or does everything coming into this country violate this godforsaken law in SOME way?] In apparel imports, the “first thing they look for” is drawstrings. Don’t go there. . . .

Q&A: What if you disagree with the conclusions of your compliance officer? What are your due process rights?

MS: You are encouraged to call “up the chain”. We are concerned to be responsive and want to know if you feel something is amiss.

60% of recalls come in under the Fast Track Recall program. In other words, this decision is made to pick up the “benefits” of the FTR program but also muddy the water about the state of the law on “substantial product hazards”.

[RW: This is a total cop-out on the part of the agency and contributes significantly to the confusion on the workings of the law. In addition, the defects in the FTR program make everything worse. Marc Schoem admitted during Q&A that you often have only a DAY to decide whether or not to participate, which is inherently coercive. For most companies, unprepared for a federal agency descending on them with an "offer that you can't refuse" with an eight hour time limit, the pressure can be overwhelming. It is not unusual to get this "fine" offer before all relevant facts are known, and even when basically NO relevant facts are known. One wonders if the Shrek glasses recall was one such event. See no evil, hear no evil, speak no evil?]

Why call everything a “recall”? MS: We like the word “recall” and think it’s most effective to “get the word out”. [See Nancy Nord's blogpost from earlier today. The word also has tremendous under the CPSIA - perhaps Mr. Schoem's favorite word needs to be revisited since things have changed. It is also a tough word when there is litigation going on.]

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CPSIA – ICPHSO Update on Compliance and Field Operations

CPSIA – More Data on Devastation of Resale Industry

Can any sensible person continue to deny the pain inflicted on resale and consignment shops by the CPSIA? The issues have been well-documented for almost two years now. Not only were these small businesses needlessly harmed by this law and forced out of the children’s market, but the neediest American families dependent on these outlets were left in the lurch, too. Congressional Democrats left them there with the justification that it was for their own good. Spoken like someone with warm clothing on.

NorthJersey.com published an interesting piece on the plight of these retail outlets yesterday entitled “Some Thrift Shops Hurt by Lead-free Law“. It starts out:

“Janis Nelson, owner of Growing Kids consignment shop in Riverdale, points to a heavy book of lead-paint recalls as explanation for the store’s decision to stop selling second-hand children’s toys . . . . she could not risk a $25,000 fine, which is possible under the law if a single toy with lead were to slip past the heavy book of recalls.”

And the shops aren’t the only losers. The article continues:

“Besides hurting the stores financially, [store owner Lorraine] DeHart said that the law can also hurt consumers, who may be turning to thrift shops because they cannot afford department store prices. ‘People can’t afford to buy it new,’ she said. They might turn to garage sales, she said, where there tends to be less scrutiny over products sold. Yet even garage sales are not exempt from the new law. ‘If you’re going to have a garage sale, be careful what gets sold because if someone gets hurt they can sue you,‘ said Kathleen Reilly, public affairs specialist for the U.S. Consumer Product Safety Commission.” [Emphasis added]

What a calming effect the CPSC has on this market! I can’t wait to see what the CPSC’s Small Business Ombudsman does to earn his wages. Perhaps he will roam the land assuring small businesses that by complying with the thousands of pages of rules under the CPSIA, they can avoid getting sued, fined or jailed.

Crazy? Remember the words of Inez Tenenbaum: “‘CPSC’s new authority to seek higher civil penalties does not mean we will ignore serious violations by small businesses,’ said CPSC Chairman Inez Tenenbaum. ‘We will continue to take enforcement action against any business, large or small, that violates the Commission’s product safety laws and regulations.’”

And the market reality for the resale industry today? Ask the National Association of Resale & Thrift Stores: “NARTS members have reported significant increases in both sales and incoming inventory, according to NARTS, but those that sold children’s products did not fare as well with 44.2 percent experiencing a decrease in sales due to the challenges of complying with the consumer act of 2008.”

It’s time for Congress to stop sucking its thumb and do something for the neediest members of our society. Of course, some modest risk will be required to fix the mess they made in 2008. Resale shops deserve a bright line rule to encourage them back into the business of selling used children’s products. The law’s focus should be on recalled items only. The rest of the used children’s product category should be saleable without risk of liability unless the store has actual knowledge of a hazard. The strictures of the CPSIA will slowly and effectively clear out old inventory over time.

The resale industry has NO HISTORY of selling dangerous products or harming children. The “risk” of restoring the market sanity that prevailed before the lead mania of 2007/8 is trivial but the harm inflicted by the CPSIA fix is real and profound.

It’s time to ‘fess up and fix the law, guys!

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CPSIA – More Data on Devastation of Resale Industry

CPSIA – Rob Wilson’s Op-Ed in PSL on Resale Guidance

October 9, 2009

Consumer Confusion Comes From CPSC Guidance, Not the Media

By Rob Wilson

Product Safety Forum recently published an article by Consumer Product Safety Commission (CPSC) Chairman Inez Tenenbaum intended to reassure thrift stores and families holding garage sales that the CPSC will not punish them with million dollar fines for sales of recalled items in violation of the Consumer Product Safety Improvement Act (CPSIA). Those of us who manufacture children’s products support the CPSC’s effort to rid the market of recalled products, but Ms. Tenenbaum’s essay vividly illustrates her misunderstanding of the fears generated by the new product safety law.

Why are families and resale shops pulling children’s products from their stores and garages? It’s not for fear of selling recalled products; after all, it’s relatively easy to go on the CPSC website and learn which items have been recalled.

It’s not the media causing confusion and panic in the marketplace, as Ms. Tenenbaum asserts in her article. In fact, the fears were caused by the CPSC itself, originating in its recently published guidebook, CPSC Handbook for Resale Stores and Product Resellers.

The handbook explains that the new law not only prohibits the sale of recalled products at yard sales or by thrift shops, but also any product that doesn’t meet the CPSIA’s strict new lead standard, contains any one of six prohibited phthalates (found in plastic), or violates any other CPSC standard, ban, rule, or regulation. The possibilities for violating the law seem endless.

The handbook lists many products that may fall into this category: painted products, wood products with any varnish or paint, clothes with rhinestones, metal or vinyl/plastic snaps (including buttons), zippers, grommets, closures or appliqués, inexpensive children’s metal jewelry (ie. children’s jewelry not made from gold, platinum, sterling silver, precious stones, pearls, or other absurdly expensive materials), books printed in 1985 or earlier, or any book that can be played with. In a nutshell, the items that you typically see at a family’s garage sale or a thrift store.

Yet resellers and families holding garage sales have no idea whether the buttons on a child’s shirt contain lead above or below the new standard, or whether a plastic toy contains phthalates. The only way to tell is by testing it, and families aren’t going to spend hundreds of dollars per product to test a $5 tinker toy. In many cases, including tests for phthalates, the product must be destroyed. If families could afford to test products, even the most entrepreneurial might find it difficult to sell the product once it’s turned to dust. The CPSC’s handbook offers a good solution: don’t sell the children’s product if you are not sure.

But perhaps you are thinking, “this doesn’t apply to me.” Back to the handbook for guidance: “You are not required to test your products for safety. However, resellers (including those who sell on auction Web sites) cannot knowingly sell products that do not meet the requirements of the law. You can protect yourself by screening for violative products. Ignorance of the law is not an excuse.” The handbook then goes on to advise: “If you should happen to sell or offer for sale a product in violation of the CPSIA or other law, CPSC’s response will vary depending upon the circumstances, including the nature of the product defect, the number of products, the severity of the risk of injury associated with the product and the type of violation. The Commission’s response would also take into account the fact that you may be a small business.”

In other words, the “guidance” is clear as mud. You don’t have to test, but you better not sell products that don’t meet requirements of the law, which you can only determine if you test. If you do violate the law, CPSC may take it easy on you if you are a small business or a family holding a garage sale . . . unless they decide not to.

The heart of the problem for the resale community is the retroactive nature of the law. If the law were not retroactive, all items manufactured according to the rules before February 10, 2009 would be deemed safe, and anything made after the implementation would be certified compliant (and safe). Without retroactivity, thrift stores must follow CPSC guidelines and eliminate most of their children’s products, since most fit the profile of a “risky” product (meaning there is even a slight chance they might not meet the new standard), they must be presumed not compliant unless proven otherwise.

If Chairman Tenenbaum wants coats, toys, books and children’s products to remain in thrift stores this Christmas season, she needs to stop being a mouthpiece for the authors of the legislation who claim the law is absolutely perfect. If she wants families to be able to sell their kids’ old clothes and toys on the weekends and remain law abiding citizens, she must start being an advocate for a common sense approach to implementing CPSIA. If she wants consumers to still have access to handmade, natural or educational products, she needs to take a serious look at why this law is hampering their availability.

Chairman Tenenbaum vowed at her Senate confirmation hearing to bring a common sense approach to CPSIA implementation. We are still waiting for signs of common sense from the agency regarding CPSIA. Now is the time for the Chairman to end the confusion and dysfunctionality in the marketplace by advocating for common sense changes to the CPSIA.

Rob Wilson is vice president of Challenge & Fun, an importer of natural toys, founder of CPSIA-Central, and a board member of the Handmade Toy Alliance. Contact him at rob@challengeandfun.com

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CPSIA – Rob Wilson’s Op-Ed in PSL on Resale Guidance

CPSIA – Wanted, a Demonstration of CHARACTER

I hear from readers of this Blog practically every day. It is obvious that I am not alone in my strong opposition to the CPSIA

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CPSIA – Wanted, a Demonstration of CHARACTER