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CPSIA – More Good News and Bad News

We trust our government, right?

CPSIA – Another Update on How VERY Safe We Are

I want to bring you up-to-date on the nuclear situation in Japan, but first a quick reminder – none of this matters BECAUSE there is no lead in plutonium or the other radioactive elements being discharged in tremendous mass into the air, water and soil by the disabled Fukushima reactors.

CPSIA – AAP, Get a Calculator!

In my continuing exploration of the misuse of data by consumer groups to prove up the “need” for the CPSIA, it occurred to me that Dr. Dana Best of the American Academy of Pediatrics can’t multiply. She needs a new calculator.

Just an aside: Japanese government officials announced today that radiation OUTSIDE the disabled reactors at Fukushima have now reached LETHAL levels:

“Water in an underground trench outside the No. 2 reactor had levels exceeding 1 sievert an hour, a spokesman for plant operator Tokyo Electric Power Co. told reporters in the capital today. Thirty minutes of exposure to that dose would trigger nausea and four hours might lead to death within two months, according to the U.S. Environmental Protection Agency. Preventing the most-contaminated water from leaking into the ground or air is key to containing the spread of radiation beyond the plant. A partial meltdown of fuel rods in the No. 2 reactor probably caused a jump in the readings, Japan’s chief government spokesman said today. ‘There’s not much good news right now,’ said Gennady Pshakin, a former IAEA official based in Obninsk, the site of Russia’s first nuclear power plant.” [Emphasis added]

The Japanese situation is a real crisis. The AAP wants you to think lead is also a crisis. It’s not.

In my post yesterday, I reported on Dr. Dana Best’s testimony in front of the CPSC Commission on February 16th about the purported effects of even trace amounts of lead on the intelligence of our children. While Dr. Best speaks for the AAP on occasion, I know that she doesn’t always write her own testimony. Sometimes she reads words written by other people under her own name. In the Spring of 2008, I went looking for Dana Best, and in response to a voicemail I left at her office, Cindy Pelligrini of the AAP called me back. Dana Best never called me back. I was calling in reference to the then pending Illinois lead labeling law which was being propelled by Dr. Best’s seminal House testimony on lead (September 20, 2007). In that phone conversation, Ms. Pelligrini acknowledged to me that she had written the September 20th testimony, not Dr. Best, and as a consequence, was the “right person” to talk about its contents. Ms. Pelligrini’s qualifications to write House testimony on lead on behalf of a professional association of pediatricians? According to her in our conversation, she holds a degree in political science. She is not a doctor and she is not a scientist as far as I know.

So is it surprising then that Dr. Best got all tangled up in numbers in the recent CPSC testimony? As I noted yesterday, Dr. Best asserted the following: “When averaged across even a modest population of children, the public health harm caused by lead is significant. Considering that there are about 75 million children in our nation, impacting one-half of one percent of all children would mean an exposure of 3.75 million children. . . . For one million children, [the loss of lifetime income from one IQ point per child] would total over $8.3 billion.” [Emphasis added]

Okay, let’s break out our calculators and check Dr. Best’s math. 75 million x 0.005 = 375,000. Oops! Didn’t she say that “one-half of one percent of all children” is 3.75 million kids? Hmmm.

[Sidebar - she's almost right about the population of kids, but not quite. According to, there were 75.2 million children living in the U.S. in 2010. Of course, only 50.4 million were under 12 years of age, basically the age bracket covered by the CPSIA. This is not a calculator error, this is just more junk statistics from a so-called "expert". I hope the CPSC Commission employs a fact checker!]

I think that’s a big difference. 3.75 million children is 1-in-20 but 375,000 is 1-in-200 (based on a population of 75 million children, an inflated number). Using the more realistic population number of about 50 million, Dr. Best’s 3.75 million number is 1-in-13 children. Dr. Best’s number suggests that there is likely to be two or more lead poisoning victims in EVERY classroom of children in our country. Do you believe that?

Give me a break. The problem is that there are many people out there who might believe this nonsense. Some of them may be your elected representatives.

Dr. Best goes on to “illustrate” the scope of the “cost” of this poisoning, all based on her assumption of 1-in-13 children losing IQ points. She illustrates the “cost” to society of the loss of a single IQ point on a seemingly “modest” population of 1 million children. [Don't forget, she hasn't produced even ONE victim yet.] Since she is apparently severely math-challenged, let me help you here. One million children is (roughly) 2% of the age range covered by the CPSIA. In other words, it’s about 1-in-50 kids. Her “modest” assumption implies at least one brain-damaged child in every other classroom in America, all because of lead-in-substrate in children’s products. Her illustration is intended to show that the incredibly “high” cost of the purported lead epidemic justifies the extreme measures of the CPSIA to eliminate lead down to trace levels in children’s products.

Do you believe her? Why, exactly? If there are so many damaged children from lead-in-substrate in children’s products, why can’t the AAP come up with a few and show real case histories? Why won’t they talk about real data?

I am not impressed. The AAP holds itself out as an “expert” but puts out junk statistics to back up junk science recommendations. We are being scammed.

You MUST demand of your Congress that they won’t be fooled. The age of junk science needs to be brought to an end! Let your voices be heard!

Read more here:
CPSIA – AAP, Get a Calculator!

CPSIA – Good News and Bad News

Here’s the scoop: there is no safe level for lead but apparently there ARE safe levels for radiation.

According to reports today, the radiation drifting over from Japan is “harmless”. No one should worry one little bit even though the Japanese radioactive material is now on the EAST Coast of the U.S.: “Since last week, the officials have tracked the radioactive plume as it has drifted eastward on prevailing winds from Japan — first to the West Coast and now over the East Coast and the Atlantic, moving toward Europe. . . . On Monday, European officials said the plume had reached the East Coast after drifting over North America. One station that detected the fresh radioactivity is in Charlottesville, Va., officials said.”

This is not a problem, believe me. For one thing, it’s not lead, for heavens sake – it’s only iodine-131, iodine-132, tellurium-132 and cesium 137. You probably put that stuff on your cereal, tough guy!

The radiation levels are so low that the experts won’t release them. They probably don’t want to bother us, the levels are so low. “The global network of the Comprehensive Test Ban Treaty Organization, an arm of the United Nations in Vienna, has detected the movements of the plume. The organization’s mandate is to monitor the global ban on the testing of nuclear arms, and it has more than 60 stations that sniff the air for radiation spikes. The group has declined to make the recent findings public, but it shares its information with 120 member states, some of which have divulged the status of the plume’s movements.”

Experts point out that radioactivity is everywhere, what’s the problem with a little more???

The federal government apparently agrees with this guy: “While the news of these radioactive substances being detected may startle some residents, the EPA has emphasized that the normal daily dose of radiation is 100,000 times higher than the radiation found at these monitoring stations. Every day, people are exposed to radiation unknowingly. Radiation is present in food, air, water, and even our homes, all of which are natural sources of it. Increased exposure to radiation can come from medical procedures and industrial occupations as well.” [Emphasis added]

This is in interesting contrast to lead which as everyone knows is dangerous down to one lone, little atom. I know this because pseudo-scientists like American Academy of Pediatricians (fearful of bicycle licking!) and Consumers Union (terrified about 4th graders playing brass instruments!) have repeated over and over that there is NO safe level for lead. NO safe level, kids! They’re experts so they must know, right??? At least they say they’re experts . . . .

These folks pushed Congressional patsies to impose an outright ban on ANY children’s product that might emit ANY lead into the human body. [Section 101(b) of the CPSIA] The CPSC Commission (really, the Democrats on the Commission) helpfully interpreted Section 101(b) to refer to ANY lead, meaning one atom. Nothing ON EARTH can be exempted on this basis, so nothing has been given a pass under the lame-o exemption provision of the act. Had troubling finding choices in new children’s bikes? Want to buy a youth model ATV? Remember the days when you could buy rhinestones to embellish your children’s shoes or pants or in the form of cheap jewelry? You can thank Section 101(b) for this absurd situation. L&K to the AAP and CU (and let’s not forget the Queen Bee of the zealots, Rachel Weintraub of the CFA) for all this safety!

Thank heavens that AAP, CU and CFA aren’t worried about radioactivity. That means there MUST BE safe levels of radioactivity . . . . I see, Fukushima prefecture spinach or milk isn’t really dangerous – but it will give you a healthy glow!

Read more here:
CPSIA – Good News and Bad News

CPSIA – My Written Testimony at Senate Hearing 12-2-10

As you may know, there will be a Senate CPSC oversight hearing tomorrow. The hearing will be held by the Subcommittee on Consumer Protection, Product Safety and Insurance of the Senate Committee on Commerce, Science and Transportation. You can see the witness list here. The subject of the hearing is “Oversight of the Consumer Product Safety Commission: Product Safety in the Holiday Season”

I have submitted the following written testimony. I will not be testifying at this hearing.

Chairman, Learning Resources, Inc.
Vernon Hills, Illinois

December 2, 2010

As an operator of a small business making educational products and educational toys, I have had a front row seat for the implementation of the Consumer Product Safety Improvement Act of 2008 (CPSIA) by the Consumer Product Safety Commission (CPSC). On the occasion of your CPSC oversight hearing, I want to highlight the economic damage wrought by the CPSIA without achieving any material improvement in safety statistics. I also want to bring to your attention the open hostility of the CPSC toward the corporate community in the implementation and enforcement of the CPSIA, and conclude with my recommendations for legal reforms to restore common sense to safety administration without reducing children’s safety.

Children are our business. As educators, as parents and as members of our community, we have always placed the highest priority on safety. We would not be in the business of helping children learn if we didn’t care deeply about children and their safety. The CPSIA has dramatically impacted our business model, reduced our ability to make a profit and create jobs, pared our incentive to invest in new products and new markets, and generally made it difficult to grow our business. We would gladly accept these burdens if the law made our products safer, but the fact is that it hasn’t. Our company, Learning Resources, Inc., has recalled a grand total of 130 pieces since our founding in June 1984 (all recovered from the market). Our management of safety risks was highly effective long before the government intervened in our safety processes in 2008.

The precautionary approach of the CPSIA attempted to fill perceived “gaps” in regulation by making it illegal to sell children’s products unless proven safe prior to sale. Yet the law has yielded few quantifiable safety benefits other than a reduction in recent recall rates for lead-in-paint (already illegal in children’s products for decades). Ironically, this progress in reducing recalls has taken place in a 27-month period in which, like the time before the CPSIA, testing of children’s products prior to sale was not mandatory. Consumer confidence wasn’t dented by the lack of mandatory testing. The justifications for the over-arching and excessively expensive CPSIA regulatory scheme just don’t hold water.

In any event, the reduction in recall rates is only a minor triumph and was not due to mandatory testing or harsh new lead standards, but most likely a (hyper) energized regulator and a great deal of publicity. Recall statistics can be highly misleading because the rate and number of recalls depend on many factors and do not generally correlate to injuries to children. In other words, product recalls are not tantamount to childhood injuries. The purpose of the CPSIA is to reduce injuries, not product recalls – yet CPSC recall statistics show that there have been almost no reported injuries from lead or phthalates in children’s products in the last decade (one death and three unverified injuries from 1999-2010, all from lead or lead-in-paint). The billions of dollars now being spent by the corporate community annually on testing and other compliance activities have not reduced injuries – there weren’t any to reduce. Whatever peace of mind has been generated by lower recall rates comes at a very high price.

The CPSIA significantly broadened the reach of federal safety regulation well beyond what was needed to deal with the lead-in-paint toy violations of 2007 and 2008. Under the CPSIA, the definition of a “Children’s Product” subject to regulation now encompasses ALL products designed or intended primarily for a child 12 years of age or younger (15 U.S.C. §2052(a)(2)). This definition ensures that virtually anything marketed to children will be subject to the restrictions of the Consumer Product Safety Act (CPSA), irrespective of known or quantifiable risk of injury. Put another way, this definition ensures that many product categories with a long tradition of safety are now subject to the withering requirements of this law for the first time simply because they fall within the overly broad definition of a Children’s Product. The affected safe products span the U.S. economy books, t-shirts and shoes, ATVs, bicycles, donated or resale goods, musical instruments, pens and educational products. The CPSC declined to use its discretion to narrow this definition in its recent “final rule” interpreting “Children’s Product”, thus ensuring continued market chaos and economic waste.

The consequences of the change in the consumer safety laws to a precautionary posture has had notable negative impacts and promises to create further problems, namely:

a. Increased Costs. The new law creates a heavy burden for testing costs. From 2006 to 2009, our company’s testing costs alone jumped more than eight-fold. We estimate that our testing costs will triple again after the CPSC (as anticipated) lifts its testing stay in 2011, and could multiply again if the CPSC enacts (as anticipated) its draft “15 Month Rule” on testing frequency and “reasonable testing programs”. Testing costs are often thousands of dollars per product. Having employed one person to manage safety testing and quality control for many years, we now have a department of five, including me, plus an outside lawyer on retainer. These jobs are funded by discontinuing sales, marketing and product development jobs – the CPSIA is NOT an ersatz stimulus program. Personnel, legal and other out-of-pocket safety expenses (besides testing) have more than quadrupled in the last three years – all without any change in our super-low recall rates or injury statistics.

b. Increased Administrative Expenses. The CPSIA requires that all products include tracking labels on both the packaging and the product itself. Rationalized as “analogous” to date labels on cartons of milk, tracking labels are in reality nothing but pure economic waste as applied to the vast array of “Children’s Products” under the CPSIA. As noted, our company has a virtually unblemished 26-year track record of safety so tracking labels promise to add little value in the event of recalls that are unlikely to occur. Ironically, with the strict new rules governing product safety, we believe the already low chance of a product recall has been reduced further. As noted above, the money to pay for all this administrative busy work comes from foregone business opportunities. We are being forced to shrink our company to apply tracking labels that no one will use.
An equally frustrating bureaucracy has sprung up around recordkeeping under this law. Burdensome requirements spawned by the government’s new involvement in our quality control processes forced us to make large new investments in information technology with no return on our investment. In addition, the pending CPSC draft policy on component testing promises to convert the simple task of obtaining a complete suite of safety test reports into a major recordkeeping chore. We will now be forced to manage each component separately, tracking test reports on each component one-by-one. This promises to multiply our recordkeeping responsibilities – and the related risk of liability for failing to comply – by more than an order of magnitude.

c. Reduced Incentive to Innovate. The increased cost to bring a product to market under the CPSIA will make many viable – and valuable – products uneconomic. To cover the cost of developing, testing and safety-managing new products, the prospective sales of any new item (“hurdle rate”) is now much higher than under prior law. This means that low volume “specialty market” items are less likely to come to market and many new small business entrants may find themselves priced out of the market. The CPSIA makes it much harder to start a new business serving the children’s market because the rules so heavily favor big business. Because of CPSIA transactional costs, high volume items now have a huge cost advantage over low volume items. This will hurt many small but important markets like educational products for disabled children. Our company, with its 1500 catalog items, is probably now a dinosaur under the CPSIA –the law provides a strong economic incentive to restructure our business around 50-150 items and to focus on high volume markets only. Schools would suffer from the loss of niche educational products.
d. Crippled by Regulatory Complexity. Our problems don’t end with testing costs or increased staffing. We are being crippled by regulatory complexity. Almost 28 months after passage of the CPSIA, we still don’t have a comprehensive set of regulations. Please consider how mindboggling the rules have become. There were fewer than 200 pages of safety law and CPSC rules that pertained to our business until 2008. These rules clearly defined our responsibilities and could be taught to our staff (in fact, many were rarely applicable to us). Today, the applicable laws, rules and interpretative documents exceed 3,000 pages. As a practical matter, it is simply not possible to master all of these documents – and yet it’s potentially a felony to break any of these rules. Sadly for us, the rules and CPSC staff commentary keep changing, are still being written and are rarely if ever conformed. How can we master and re-master these rules and teach them to our staff while still doing the full-time job of running our business? Ironically, the recalls of 2007 and 2008 were never a “rules” problem – those famous recalls were clearly a compliance problem. Imagine what will happen now with an unmanageable fifteen-fold increase in rules. No small business “ombudsman” can make that problem go away.
e. Small Business Will Certainly Suffer. The CPSIA was written in response to failings of big companies, but hammers small and medium-sized companies with particular vengeance. Our small business has already lost customers for our entire category on the grounds that selling toys is too confusing or too much of a “hassle”. This is our new reality. The highly-technical rules and requirements are beyond the capability of all but the most highly-trained quality managers or lawyers to comprehend. Small businesses simply don’t have the skills, resources or business scale to manage compliance with the CPSIA. For this reason, small businesses bear the greatest risk of liability under the law, despite being responsible for almost no injuries from lead in the last decade. The double whammy of massive new regulatory obligations and the prospect of devastating liability are driving small businesses out of our market.

In implementing and administering the CPSIA, the CPSC created a harsh regulatory environment for the business community over the past 28 months. Consider the following:

1. Unjustified Recalls. In June, in response to an inquiry by a Congressman and followed up by media inquiries, the CPSC pressed McDonalds to recall 12 million Shrek glasses for “high” cadmium content, despite the agency’s admission on Twitter that the glasses were not toxic. The recall effort was justified as being done “out of an abundance of caution”, a frightening regulatory standard when applied to products acknowledged to be safe by the regulator itself. McDonalds lost millions of dollars as a result, not to mention suffering from widespread and persistent bad publicity.

2. Unjustified Penalties and Coercive Tactics. The CPSC assessed a $2.05 million penalty against a hapless Japanese dollar store chain (Daiso) for five separate tiny recalls involving 698 units and 19 items. These items sold for between $1 and $4 each. There were no reported injuries from sales of the Daiso trinkets. Ms. Tenenbaum bragged about this extraordinarily excessive prosecution in a speech in March 2010 to the Consumer Federation of America: “We secured an injunction that completely stops Daiso from importing children’s products into the country. . . . Daiso has a very high hurdle to jump over to ever get back in the import business again.” Regulated companies take stunning examples like Daiso as a warning that outsized and disproportionate force may be used by this agency with little provocation.
The regulated community has also expressed alarm over the threatened use by the agency of unilateral press releases “to warn the public” about alleged dangers in specific products as a way to coerce “voluntary” recalls. Such threats have been used where facts may be in dispute to justify a recall. Under the law, the CPSC may only implement mandatory recalls subject to a court order, a slow process perhaps but also expensive and labor-intensive. “Voluntary” recalls can be much quicker and cheaper, only requiring “agreement” between the agency and the subject company. In more than one case, CPSC has threatened unilateral releases to try to “convince” a firm to undertake a “voluntary” recall but after the firm took the risk of standing up to the staff and the staff conducted further investigation, the CPSC decided that recalls were not even necessary. Not all firms can bear the expense of such a process or take the risk of calling the staff’s bluff because issuance of a release would likely damage the firm and their brand, possibly irrevocably. Many supposedly “voluntary” recalls have resulted. Abusive tactics of this nature have severely damaged trust between the CPSC and the regulated community.

3. Disregard of Public Comments. The agency has garnered considerable criticism for overlooking or disregarding comments from the corporate community solicited in its public rulemaking processes. Ignoring or disregarding inconvenient public comments contrary to the agenda of the controlling party makes a mockery of the legally-mandated public comment process. Notable instances include the recent approval of interpretative rule on “Children’s Products” and the rules implementing the public database of safety incidents. The database debate was so fouled by the majority’s refusal to entertain the legitimate concerns of industry that the two minority Commissioners proposed their own draft rule – which the CPSC at first refused to post on its website.
4. Unjustified Hostile Rulemakings. The CPSC has implemented rules governing the public database that adversely affect the Constitutionally-guaranteed due process rights of our businesses. There is no adequate public policy justification for the erosion of the remarkable civil rights that distinguish the American legal system among all international legal systems – yet the Commission voted 3-2 to allow falsehoods to be posted without recourse in a database the CPSC will maintain. In other cases, the agency has published draft rules (yet to be acted on) which could force companies like ours to spend as much as $10,000 per item per year to meet ARBITRARY rules on testing frequency or “reasonable testing programs” – notwithstanding strong evidence that these rules are wasteful, unnecessary and financially irresponsible. The pendency of rules like this creates destabilizing market uncertainty and forces business decisions that have no basis other than fear of future regulation. For instance, Wal-Mart has already instituted a 100 ppm lead standard months ahead of the POSSIBLE implementation of the standard by the CPSC – simply because the CPSC has been so slow to act.

The CPSIA went off track by taking away the CPSC’s authority to assess risk. If the CPSC were again required to regulate based on risk, safety rules could focus on those few risks with the real potential to cause harm to children. All risks were not created equal.

I recommend several steps to reduce cost, liability risk and complexity all without sacrificing children’s product safety:

A. Mandate that the CPSC base its safety decisions, resource allocation and rules on risk assessment. Restore to the Commission the discretion to set age and product definition criteria for the 300 ppm lead standard and phthalate ban. Freeze the lead standard and lead-in-paint standard at their current levels unless the CPSC determines that a change is necessary to preserve public health and safety.

B. The definition of “Children’s Product” should not include anything primarily sold into or intended for use in schools or which is used primarily under the supervision of adults. Other explicit exceptions should include apparel, shoes, pens, ATVs, bicycles, rhinestones, books and other print materials, brass and connectors. Exclusions from the definition should take these products entirely outside the coverage of the CPSIA (including mandatory tracking labels).

C. Lead-in-substrate and phthalate testing should be based on a “reasonable testing program”, not mandated outside testing. The tenets of a reasonable testing program should be set by the reasonable business judgment of the manufacturer. Resellers should be entitled by rule to rely on the representations of manufacturers. Phthalate testing requirements should explicitly exempt inaccessible components, metals, minerals, hard plastics, natural fibers and wood.

D. Definition of “Children’s Product” should be limited to children six years old or younger and should eliminate the difficult-to-apply “common recognition” factor of Section 3(a)(2)(c) of the CPSA. Definition of “Toy” (for phthalates purposes) should be limited to children three years old or younger and should explicitly refer only to products in the form used in play.

E. Eliminate CPSC certification of laboratories (rely on the market to provide good resources). Fraud has only very rarely been a problem with test labs and is already illegal.

F. Impose procedural limits to insure fairness in penalty assessment by the CPSC under the CPSIA. Completely reformulate penalties to restrict them to egregious conduct (including patterns of violations), reckless endangerment or conduct resulting in serious injury.

G. Rewrite the penalty provision applicable to resale of used product so that violations are only subject to penalty if intentional (actual knowledge or reckless endangerment) and only if the violation led to an actual injury. Eliminate the “knowing” standard with its imputed knowledge of a reasonable man exercising due care.

H. Mandatory tracking labels should be explicitly limited to cribs, bassinets, play pens, all long-life “heirloom” products with a known history of injuring the most vulnerable children (babies or toddlers).

I. Public injury/incident database should be restricted to recalls or properly investigated incidents only. Manufacturers must be given full access to all posted incident data, including contact information. The “due process” civil liberty interests of the corporate community MUST BE PROTECTED.

I urge your committee to address the fundamental flaws in the CPSIA to restore order to the children’s product market and to protect small businesses from further damage. I appreciate the opportunity to share my views on this important topic.

Read more here:
CPSIA – My Written Testimony at Senate Hearing 12-2-10

CPSIA – Daiso Death Penalty

Ole’ paranoid Rick of the vivid imagination has been suggesting that the massive powers accorded to the CPSC by the CPSIA may be used with few controls. This can lead to serious excess. Crazy, right?

Remember the Japanese company Daiso? I mentioned them last October for the first phthalates recall in U.S. history. That recall was for 40 uninflated toy baseball bats, something that could be held in one hand. Not even one box full. Clearly a national emergency. Interestingly, this urgent recall violated the promise of CPSC staff made at ICPHSO in February 2009 that the focus of enforcement of the phthalates ban would be on chew toys and bath toys, neither of which includes inflatable baseball bats. Broken promise by regulators? Details, details. I know, I’m just picky.

Anyhow, I mentioned Daiso again a few weeks ago for the absurd penalty assessed against them in the amount of $2.05 million. Absurd, unless you are Daiso, then perhaps you don’t think it’s so absurd. This penalty was assessed for a pattern of behavior that included five recalls of 19 items and 698 total units over two years, including the 40″dangerous” baseball bats. Daiso apparently also had various undisclosed disputes over imports stopped at the ports. Clearly something else was going on . . . but $2.05 million? I made the point that this is excessive and lacked any apparent effort to measure the agency response and escalate it in some appropriate way. Instead, it was escalated from zero to $2.05 million.

Notably, the CPSC signalled its “seriousness” by sic’ing the U.S. Attorney on Daiso, taking the unusual step of seeking an injunction. Hmmm. Nightmare scenario, all because of 698 units recalled. Anything goes nowadays.

I hate the idea that Daiso is precedent that could justify just about . . . anything. Now consider Chairman Inez Tenenbaum’s own words about the Daiso situation (from the recent Consumer Federation of America conference):

“To show how serious we are about enforcement at the ports and holding importers accountable, all of you should know that just last week we levied a serious fine – a $2 million fine – against a west coast importer named Daiso. Daiso repeatedly ignored our warnings to stop importing children’s products that violated federal rules on lead paint, lead content and small parts. Now the fine was large, but that wasn’t the big news. The big news is that we are being more creative in the use of our enforcement actions. We secured an injunction that completely stops Daiso from importing children’s products into the country. We worked closely with the Justice Department on this case, and Daiso has a very high hurdle to jump over to EVER get back in the import business again. The company must hire a safety professional and prove to us that it knows our laws and is in compliance with our laws.”

[Emphasis added]

So Ms. Tenenbaum believes she has the right to use her powers to put companies out of business. In this case, it appears that she really does not want to be crossed. Daiso, for whatever reason, didn’t measure up to agency expectations. Could be venality. Could be incompetence. Could be big company-itis. I have no idea. Nonetheless, it is clear that there were no penalties along the way (at least, not announced). There were no publicly-announced regulatory interim steps at all other than the five recalls of trivial amounts of product. Could it be that five recalls totally 698 units with no injuries reported might not seem like an emergency? Not anymore – stop the presses if it happens to you. The U.S. Attorney may be coming soon! Then – boom! – you’re out of business, courtesy of the U.S. government.

This could happen to you. And me, especially for writing this blog. That makes me “uncooperative”. It’s a “Father Knows Best” world now.

[For more info on how the CPSC is in the pocket of "consumer advocates" who are haters of companies who dare (stupidly) to cater to children's markets, read the rest of Ms. Tenenbaum's speech at the CFA meeting.]

Read more here:
CPSIA – Daiso Death Penalty

CPSIA – Anyone Care about Penalties Yet?

Cassandra here . . . .

Let me try you out on a hypothetical. What would you recommend as “consequences” for the following fact pattern? A company exhibits a pattern of safety incompetence over a period of time. Owing to agency vigilance, they are told multiple times to shape up, which they never get around to doing. No one is injured, but several minor recalls result. As we live in a time of political correctness and hyper-concern over trivial matters, the recalls not surprisingly involve only a few units of numerous products (less than 1000 units over two years). No injuries are reported. Numerous letters go back and forth, and theoretically, some of the culprit’s safety violations could have resulted in injuries.

So what penalty do you hit them with to get your message across?

For perspective, Mattel paid a fine of $2.3 million for about 2 million units recalled. This was national headline news. Mattel also recalled many millions more in other recalls in the same time period. RC2 paid $1.25 million for their recalls of 1.7 million units of Thomas the Tank Engine, a series of recalls that included an embarrassing recall of “thank you” gifts sent to people returning lead-laden Thomases. Target paid $600,000 for its “sins” in three relatively large scale recalls (545,500 total units). And I fully agree, respect and attentiveness to the details of the law are mandatory. Everybody needs to take these issues seriously.

And the answer is . . . . Try $2.05 million. Cash.

You wonder why I say that the CPSC leadership has blood lust . . . .

Oh yeah, I forgot, the CPSC also sicced the U.S. Attorney on ‘em, hitting the company with an injunction, a cease importation order and a mandatory plan of remediation.

Of course, I am alluding to the case of Daiso, the Japanese dollar store chain with a small U.S. presence. I have written about this company in the past, noting that they recalled 40 inflatable baseball bats for phthalates violations. For this and other unpardonable sins, this company was subjected to regulatory horrors on an incomprehensible scale. Here are their five recalls for your consideration:

May 12, 2008: 48 units, two skus
June 3, 2008: 50 units, two skus
July 25, 2008: 40 units, two skus
October 6, 2009: 430 units, four skus
October 6, 2009: 130 units, nine skus

Total over two years: five recalls, 698 units, 19 skus.

I have no personal knowledge of these people or this case. I also agree that the facts suggest that this company was recalcitrant or possibly incompetent. In any event, it’s their responsibility to take our laws seriously. Nevertheless the CPSC press release and the injunction both portray a far more serious situation than the facts seem to demonstrate. This is hardly a case of ingested super-magnets and millions of units in circulation. And the penalty, of course, is so far beyond the pale that I consider it incomprehensible. It is also extremely worrisome.

Today’s CPSC is about sound bites and putting you “on notice”. Whether their tactics are fair or appropriate seem to be a secondary concern. Note this quote from Japan Today: “‘This landmark agreement for an injunction sets a precedent for any firm attempting to distribute hazardous products to our nation’s children,’ commission Chairwoman Inez Tenenbaum said. ‘We are committed to the safety of children’s products, and we will use the full force of our enforcement powers to prevent the sale of harmful products.’ . . . CPSC spokesman Scott Wolfson said the company had been warned several times about violating safety standards.” In other words, this is entirely justified because the company had been warned and laws had been broken. I see.

There is a concept in Anglo-American jurisprudence of a punishment to fit the crime. I wish the CPSC knew something about proportionality in administering justice. Unfortunately, this CPSC seems to think that the importance of public messaging allows them to justify whatever they want to do. There seems to be no constraints, whatsoever. As Mr. Wolfson intones, after all, Daiso had been warned several times. Ergo, it’s fair to whack them with a penalty almost as great as imposed on Mattel. For less than 1,000 units sold.

Have you ever sold less than 1,000 units of something? Has anything ever gone wrong in your business? Uh-oh. Start saving up!

If you are having trouble grasping the point, consider the recent case of the man caught stealing a $3.99 bag of cheese in California. The judge went easy on him, only sentencing him to 7.7 years in jail. Nothing wrong with that, right? As the defendant’s lawyer noted in her closing remarks, “She concluded that his most recent thefts were petty. ‘We’re talking about a pack of cheese,’ she said.” Good thing the judge was listening . . . . This kind of justice brings to mind Midnight Express, the nightmarish story about Turkish jails. We’re not that kind of country, right? Right???

But in this environment, with the pack of jackal consumer groups egging them on, this CPSC is prepared to lower the boom to squish anyone who dares be incompetent. Here’s Consumer Reports on the case: “Our take: This is more evidence that the CPSC has been reinvigorated and that the new leadership at the Commission, plus the new powers under the CPSIA, mean good things for consumers.” In other words, it’s not only okay, it’s a sign of returning “health” in our U.S. government. Yippee.

I agree some sort of penalty may be merited in a case involving a pattern of violations. A large company like this one might need a large-ish penalty to “get the message”. [I wonder about that. Is it certain that this company would not have changed its behavior for a penalty of $50,000 or $150,000? The CPSC never tried smaller penalties first, as escalation seems to not be part of their vocabulary.] Nevertheless, this penalty lacks any rational relationship to the trivial problems cited in the recalls. In other words, it is completely arbitrary.

And for those of us destined to have to deal with the CPSC on resolving problems in the future, the Daiso case in your warning. Under this Commission, the agency has no apparent intention or need to be reasonable. They are unfettered in their ability to punish and exhibit no self-restraint. You won’t be able to fight them, they print their own money. It must be nice to be both judge and jury.

This is what our country has turned into. I CAN’T WAIT TO VOTE AGAIN. November can’t come fast enough for me.

Read more here:
CPSIA – Anyone Care about Penalties Yet?