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CPSIA – What’s Missing from the CPSIA Amendment?

I have summarized my comments on the pending CPSIA amendment in my two prior blogposts.

CPSIA – Pool Drain Hearing – Assessing Risk or Doling out Political Favors?

The CPSC has announced hearings on April 5th on the adequacy of TESTING of pool drains under the Virginia Graeme Baker Pool and Spa Safety Act (VGB). This follows on the heels of the recent meeting between CPSC Chairman Inez Tenenbaum and Senators Dick Durbin and Amy Klobuchar. Mr. Durbin requested this meeting urgently in the wake of the disclosure by the Chicago Tribune questioning the adequacy of TESTING of certain VGB drains. No allegations of actual injury have been made yet, to my knowledge. Ms. Klobuchar tagged along, having previously expressed concern about the VGB drain covers. The pending CSPC hearing has been reported by the estimable AboutLawsuits.com blog, an outlet for ambulance chasers.

Ms. Klobuchar is up for reelection in this cycle. Mr. Durbin’s term extends to 2014.

The Chicago Tribune apparently was late to the drain game. I have uncovered a much earlier and more detailed investigation by ABC News that presumably spawned the CPSC investigation of this matter last Fall. ABC asserts that variability in flow data suggests less water flow with certain models than expected. The report was not uncontroversial, however. Flow was not zero, and the manufacturers note that flow depends on the pump used in the test and also the test installation method. An ANSI standard governs pool drains and three specific labs have been cleared to test pursuant to those standards: the National Sanitation Foundation (NSF), Underwriters Laboratories (UL), and the International Association of Plumbing and Mechanical Officials (IAPMO). Not exactly a rogue’s gallery of shady operators. The alternative testing cited by the Tribune was NOT performed by any of the three authorized labs.

[Remember how darned critical it was to use "CPSC-certified" labs under the CPSIA? It's absolutely essential . . . unless media or regulators want to do something else. Industry can't be trusted to use any old lab, however.]

The CPSC issued subpoenas to these three labs and received back a tidy sum of 17,000 pages of documents. Hey, that’s even more pages than toy safety rules, wow! Anyhow, they have scheduled a show trial to investigate the purportedly nefarious goings-on with these drains.

Perhaps you remember also that the Tribune article was apparently spurred by Paul Pennington, chairman of the “non-profit Pool Safety Council”. According to the Tribune article, “Paul Pennington . . . said he has sent 73 e-mails to CPSC and standards officials, pleading with them to do something about unsafe drain covers since the new law took effect in December 2008.” What a guy that Pennington is, a public-minded private citizen only interested in pool safety. . . . and maybe also (just a little bit) his company, Vac-Alert Industries, which owns patented technology that could supplement or replace the drains at enormous expense to pool owners.

Pennington previously succeeded in inducing a bevvy of left wingers in Congress (all Dems) to stand up for his technology, including Ms. Klobuchar and notably, Rep. Debbie Wasserman Schultz (D-FL20):

“Once it is considered unblockable, a single main drain no longer is required to have a backup device, such as a safety vacuum release system. The [Congressional] letter writers believe the new definition for unblockable drains leaves pool users vulnerable. ‘A dangerous drain outlet is not safe just because an ‘unblockable’ drain cover is installed,’ Congress member Wasserman Schultz said through her spokesman, Jonathan Beeton. ‘Drain covers can and do come off, or they can be improperly installed. … The VGB Act is very clear that multiple layers of protection are needed.’ The House letter also revisits what has been a hot-button issue throughout the formulation and interpretation of the legislation — whether backup devices should be required on all pools, even those with multiple drains. ‘Backup protection should be installed for every pool or spa, regardless of the number of drain outlets, unless there is no drain, or the drain itself is an unblockable drain,’ Wasserman Schultz said.” [Emphasis added]

Paul Pennington (a California resident, but a Florida company owner) contributed to Ms. Wasserman-Schultz’s reelection campaigns in 2008, 2006 and 2004.

Hmmm.

The company making the allegedly dangerous pool drain covers noted to the Tribune that you would have to weigh 500 pounds to block its drain. Very few children weigh 500 pounds . . . . In case you are dense, Pennington clarified his message to the Tribune: “Some child is going to die.”

Get it? Ms. Wasserman-Schultz certainly did.

So the big question here is – is this a real safety issue? In the post-CPSIA era, it “looks” like a safety issue. Why? Because the TESTS have been questioned. It’s not about actual risk or incidents that reveal a risk, it’s all about a controversy over a precautionary step in the product cycle, namely testing (the paperwork). The certified lab test by the certified lab is now in question and a publicity event is being staged to “reassure the public”. No injuries have been reported which suggests that the public has little reason to actually be alarmed, but then again, the papers are not in order.

Welcome to the Third World . . . .

The CPSC had to do something, since a leading Democrat Senator demanded ACTION, accompanied to the photo opp by another Democrat Senator up for reelection in a state leaning right after voting left for some time. After all, who put the Dems in charge of this CPSC? Appointments to the Commission come from where? The (Democrat-controlled) Senate. One wonders what the political calculations might have been. What can the Democrats running the CPSC do to help out??? Why not let Ms. Klobuchar save some portion of the populace? If there were a hearing, the Minnesota Senator could take credit and use that on the stump to help retain the seat. The next election will be essential and the Minnesota Senatorial race might affect both the balance of power in Congress as well as Mr. Obama and his chances to retain the Presidency. Gotta stick together. . . .

Does anyone care that no one has been injured by these drains? Does anyone care that the person apparently driving this controversy has a vested interest in stirring up the mud? Of course not. This is not about making pools safe, this is about manufacturing of political headlines.

The politicization of safety under this CPSC should be of great concern to every stakeholder. It is a great distortion of the rules of the safety game and of our legal and regulatory system. Random and excessive cost will punish industry. Worse still, no one will be made any safer. The news cycle will help feed a rapacious media and reward the political power elite, as well.

The only one guaranteed to be a loser is industry. Consumers won’t win, industry is sure to lose and the politicians will win. Whose country is this anyway?

Like I don’t know . . . .

Read more here:
CPSIA – Pool Drain Hearing – Assessing Risk or Doling out Political Favors?

CPSIA – Consumer Group Testimony at CPSC 100 ppm Lead Standard Hearing 2-16-11

I have prepared some clips from the CPSC hearing on 100 ppm Lead Standard on February 16, 2011. I have not prepared comprehensive clips on every presentation. For instance, I omitted the testimony of the testing companies from the second panel (here’s a hint – guess what they are ready and willing to do?). If you want to see video that I have not delivered to you on a silver platter, check out the CPSC video of the Morning Session (consumer groups and testing companies) and Afternoon Session (industry representatives, including my testimony).

There is a lot of interesting testimony not in my clips, in particular in the afternoon. Although I think I am giving you a lot of relevant information in the clips I prepared, you are always welcome to check my work. I was quite impressed by the other presenters in the afternoon session, and the vigorous and interesting discussion that followed, but anticipated that you would not likely spend 4-5 hours watching the entire thing. If that floats your boat, please enjoy the links above.

In this post, I am embedding several clips from the morning session where the consumer groups stated their “case”. I hesitate to characterize the testimony as “tall tales” but watch for yourself and see what you think. I have come to believe that the consumer groups will say ANYTHING to prop up their beloved CPSIA. [Consider the laughable "consumer poll" prepared by the Consumers Union promoted by Henry Waxman on the eve of the House Hearings on February 17, 2011. CU shamed themselves with this pathetic effort to "win" the debate with garbage polling data.] This may include the remarkable hyperbole in the clips below. We can speculate among ourselves whether Don Mays really shakes with fear at the thought of his daughter playing a brass instrument (he says he would be “very concerned”).

Likewise, does Dr. Dana Best believe the nonsense statistics she flung around last week, like the one about ingesting an object with 300 ppm lead costing a child four IQ points? Please, dear G-d, that statistic is absurd on its face. The assertion that children are losing four IQ points from swallowing objects with trace levels of lead is irresponsible and misleading at a minimum, and something much worse if done with understanding or intent. The spectacle of Ms. Best’s testimony included calculations of the “cost” of 1 million injured children DESPITE the inability of any consumer group to produce the case history of a single child injured from lead-in-substrate in children’s product EVER. [I replied to Dana Best in my testimony.]

We must hold Dana Best responsible for the words that came from her mouth. Interestingly, Dr. Best was the only nominal author of the seminal testimony on lead in the CPSIA debacle. According to her colleague Cindy Pelligrini, Dr. Best didn’t write her 2007 Congressional testimony (Pelligrini told me in a phone interview in 2008 that she wrote it for Dr. Best to deliver). Did Dr. Best write last week’s testimony or was it another Cindy Pelligrini job? One can’t help but wonder, given the shocking assertions based on misleading and garbled data. The AAP should be ashamed.

Dr. Dana Best (AAP) on losing IQ points and “millions” of victims:

Dr. Dana Best worries about children licking their bicycles . . .

My 17 year old daughter came along on this adventure and at breakfast the next morning, asked me why a child would like their sibling’s bike rather than their parent’s? After all, the adult bike is not regulated. I thought that was a good point, and added that if we posit that the child was going to lick something inappropriately, why would they lick a bike – why not the family car, which is coated with lead paint? Of course, I got it wrong. I was later corrected by someone who, after listening to this story, reminded me that the two year old wouldn’t lick either bike or even the car – they would play in the pool of oil under the car. You can take it from there . . . .

Don Mays (Consumers Union) and Dana Best (AAP) on the frightening prospect of children playing in brass bands:

Read more here:
CPSIA – Consumer Group Testimony at CPSC 100 ppm Lead Standard Hearing 2-16-11

CPSIA – Mania Update

Hey, did you ever wonder what it might take to satisfy a mass market retailer on safety in the post-CPSIA world? Here are the requirements of Costco – all 141 pages of fun. It’s a huge file – you may have wait a little while for it to fully download.

These documents took us six man-hours to read – to assess whether or not we understood the rules and whether we knew what to do to comply. The breathtaking out-of-pocket testing costs are scattered throughout the document – see pages 40, 41, 51, 58 and 131-134.

Needless to say, compliance with these rules is an exceptionally expensive undertaking. This kind of duplicative testing (you have to use their testing vendor and cannot supply other independent tests you have already performed and paid for) has never revealed anything that I would call a “safety” issue, but has revealed numerous meaningless niggling issues that cost a ton to resolve. No one is made safer by all this expense but we are sure made poorer. All that matters these days is whether we comply with all 141 pages, every line and every word.

Sometimes, I think the debate over the CPSIA mania is too abstract. It’s too theoretical and sides chosen by whether you “care” about safety or not. Few people bother themselves with the details. Even fewer people are willing to be accountable for what the law has unleashed.

Requirements like this 141-page document were rare before Congress took over safety administration. Now that the mania has been stoked, it is going to be hard to put the genie back in the bottle. People feel secure in a blizzard of new safety requirements. “Obviously” more requirements means more safety . . . .

Ahem, no. First of all, the more requirements, the more likely that focus shifts from safety to compliance. SAFETY AND COMPLIANCE ARE NOT THE SAME THING. Guys, here’s more bad news – tests are not always right and rarely provide meaningful information. Our supply chain is where we build in safety and by running our business properly, tests are rarely useful (we get a LOT of repetitive passing test reports). The blind faith placed in stacks of new rules and “independent” testing as a means to create “safety” is unrealistic. I remember talking to a Whirlpool engineer who assured me that EVERY recent recall of Whirlpool products had been tested under federal and state standards and passed with flying colors. Hmmm. The CPSIA safety system is devolving into a faith-based system.

Even worse and much more profound is the commerce that this kind of mania extinguishes. How many companies can manage these requirements? How many companies will pass on making a deal to avoid the risk and hassle of these purposeless requirements?

Regulators like to stick their heads in the sand. These after-market requirements are “not their responsibility”. Let the market decide, blah blah blah. Unfortunately, they can’t get off the hook so easily – they started the mania and feed it regularly with their big fines and ridiculous recalls. Sorry, we don’t live in a vacuum – yes, the actions of the regulators have an impact on the market.

To get a sense of it, read the 141 pages of Costco requirements. Welcome to my world!

Read more here:
CPSIA – Mania Update

CPSIA – Happy Birthday CPSIA!!!

Can’t let a wonderful occasion like this go unnoticed – HAPPY BIRTHDAY CPSIA! Two years ago today, President Bush signed the Consumer Product Safety Improvement Act into law, giving vast new powers to CPSC and promising wondrous new levels of “safety” for children in our country.

And how much safer we have become! In my post “Numbers Don’t Lie“, I abstracted the injury statistics from CPSC children’s product recalls over the prior 11 years. I know from “someone who should know” that the CPSC does not tabulate injury statistics like this – so I am your only source even on the second birthday of the CPSIA. No matter, the spreadsheet indicates that there were 242 recalls of children’s products between August 14, 2008 and the end of my study, April 21, 2010. By contrast, there were a total of 657 recalls of children’s products between August 14, 2008 and the randomly-selected end of my study, March 5, 1999. The injuries associated with lead that proceeded the CPSIA were one death and two asserted injuries, and after the CPSIA – one asserted lead injury (in two years). [See "Numbers Don't Lie (Update No. 1)".] What an achievement! It’s so, soooo clear we need this tough new law. . . .

By the way, I don’t mean to be too “science-y”, but a reduction in lead injuries from one death and two asserted injuries in nine years to one asserted injury in two years is simply not a statistically significant reduction. And we must consider additionally that ALL of the injuries, before and after the CPSIA, were ASSERTED BUT NOT VERIFIED. So there may be ZERO recorded actual injuries – we just don’t know. This makes our health improvement objectives even fuzzier.

And the cost of the CPSIA “final solution”? Well, I have calculated that, using the HTA’s estimate of $5.625 billion in annual CPSIA compliance costs (which I believe is low and in any event was calculated before the CPSIA showed its hand on testing frequency – see below), the 11-year cost of compliance is a mere $61.9 Billion. Using EPA metrics for the economic value of a human life and one lost IQ point, and giving full credit to each of the three asserted but unverified lead injuries, I have calculated the cost of the injuries to be $6.1 million over 11 years. That’s pretty symmetrical, don’t you think? $62 billion in costs to save $6.1 million.

Spend $10,000 to save a buck. That sums up this era in a single sentence.

Oh, but it gets even better. In case you, or pick any regulator, are too dense to understand the implications of those numbers for the future prospects of the children’s product market, the CPSC has recently published a rule for comment on testing frequency and “reasonable testing programs”. This rule was due on November 14, 2009 (hence the “15 Month Rule”) but was delayed because the CPSC understood the rule’s potential to literally kill all small businesses in this market. [That would include our business, btw.] So they held a two-day workshop in December 2009 to hear ideas and industry concerns and then spent months crafting the rule. This rule has been in the works for two years now. You have to figure they’re serious.

The CPSC was kind enough to illustrate the costs our business can expect under their sparkling new rule. So I broke out my trusty calculator (again – too math-y? too science-y?) and determined that they intend for us to spend a mere $10,000 per item per year in testing. This includes destroying 54 samples of each item in the process of testing. Anyhow, think of how many products you make – and multiply by $10,000. That’s your annual testing bill now.

Drum roll, please . . . our bill will be a mere $15 million per year! Pretty exciting to get off so easy. No doubt our bankruptcy will make American kids safer. Of course, I am pretty sure it won’t make them any smarter – our educational products will cease to exist. Then, of course, their ignorance of math and science might qualify to run the CPSC. There’s always a bright side to tragedy and catastrophe, I suppose.

It is worth a passing note that this is my 490th blogpost on the CPSIA and its terrible effects. I have submitted comments letters by the bushel basket, testified numerous times at the CPSC (often at their request), testified in front of Congress, been on national TV and radio, wrote Op-Eds and been featured innumerable times in various publications, held a rally on Capitol Hill, met with Commissioners, Congressional staffers and members of Congress, and so on. The CPSC’s actions are not being taken in ignorance. They are being done in the face of reason. This is not partisanism – this is “know nothing-ism”.

So Happy Happy Birthday, CPSIA! Your work is not done, unfortunately. Our company is still breathing.

Read more here:
CPSIA – Happy Birthday CPSIA!!!

GUEST BLOG – Bruce Lund, Lund and Company Invention, L.L.C. on the Cadmium "Crisis"

When we put the call out for Guest Bloggers a couple of weeks ago, we received this post from toy designer and inventor Bruce Lund. While he originally posted it on his own blog several months ago, it’s still relevant today.

Cadmium in Children’s Jewelry

By Bruce Lund

Knee jerk responses, ill considered opinions, and unsupported positions based on hearsay or questionable sources are all what led to the CPSIA legislative insanity that continues to grind on and grind up small companies with regulations that are expensive, onerous, and simply wrongheaded. Although well intentioned, the results are not those intended.

On the issue of cadmium levels in children’s jewelry, something which has always been in jewelry of all kinds, and has never been identified as a health risk, the Chairman of the Consumer Product Safety Commission has warned against allowing children to play with inexpensive jewelry. That, along with state level legislation may well remove jewelry for kids from the marketplace altogether – all without any science and . . .
“without the benefit of a review of the test data, which AP and its testing partner have not made public or shared with the companies whose products are named in the story. The CPSC subsequently issued a recall for one jewelry item with “high levels of cadmium,” but also did not share data – even with the company itself.”
(quoted from the Alliance for Children’s Product Safety and CPSIA, and to view previous “Casualties of the Week,” visit AmendTheCPSIA.com)

Were cadmium to be a health problem, it would have manifested itself as kidney disease, which is virtually unknown in children. The result is the toy industry and other related industries being ruled on and regulated on the basis of unsubstantiated claims in the media and politicians’ knee jerk legislation, not on the basis of fact, scientific risk analysis, or sound judgment.

That almost sounds like craziness to me. Where is the voice of reason? Could it even be heard over the din of today’s media-saturated world?

Blog post by Bruce Lund, Founder, Lund and Company Invention, L.L.C.

Bruce’s blog can be found here. The blog above was originally posted here on March 30, 2010.


Posted by the Staff of the Alliance for Children’s Product Safety

Read more here:
GUEST BLOG – Bruce Lund, Lund and Company Invention, L.L.C. on the Cadmium "Crisis"

CPSIA – Washington Post Says Cadmium Issue is Overblown

Tell me it’s not true – we can’t panic about cadmium anymore?! The Washington Post thinks the CPSC may have gone a bit too far in demanding that every American throw away all their children’s jewelry based on a newspaper article they read somewhere: “Very little is known about cadmium’s potential health effects on children, [Dr. John Rosen, chief of environmental sciences at the Children's Hospital at Montefiore in the Bronx] says, because it’s never been known to be a problem, ‘Pediatricians don’t look for it, they aren’t knowledgeable about it, and there are not any particular concerns about it.’” [Emphasis added]

The Post concludes: “So, while this is certainly no matter to pooh-pooh, and it’s important for the government to take whatever steps it must to keep poisonous metals out of the marketplace, it doesn’t sound like occasion to panic, either.” [Emphasis added]

We knew that Senators are absolutely ignorant of science so their foolishness can be understood, but what about the CPSC? Aren’t they on a different level? In the olde days, the CPSC used its professionals for their highly-refined expertise. Today, the staff brainiacs are used to bureaucratically shovel paper from one end of their desk to the other, or to practice falling in line. The folks at the top, the (Democrat) politicians, seem to have the same mastery of science as their Congressional overlords and a similar disregard for the consequences of their actions.

So Inez Tenenbaum went on a media blitz, ably assisted by her associate Scott Wolfson, and SLAMMED the jewelry industry. They had seemingly done virtually no homework (if reading an AP story doesn’t count as “research”), neglecting to take advice from the many Ph.D.s that they employ, and went ahead with an astoundingly irresponsible spree of rulemaking on the fly. And the consequences to them?

There’s the rub – there won’t be any. But there should be. This kind of tort is remediable in the private sector with lawsuits and damages. Not sure how easy it would be to prosecute such high ranking public officials for their conclusion-jumping. We can certainly count on our fearless leader Obama to COMMEND them for their precautionary actions. Surely by putting the jewelry industry out of business, they must have saved lives . . . somewhere. The nice thing about these folks, if they can assert it, it’s “true”. Or true enough.

What a sorry episode, and even with the Post on record with a calming and balanced summary of cadmium’s risks, the train already left the station. Expect the next attempt at an amendment to the CPSIA to include dramatic restrictions on cadmium. Congress will save us, don’t worry.

Hey, science is overrated. Trust me.

Read more here:
CPSIA – Washington Post Says Cadmium Issue is Overblown

CPSIA – CPSC Clears Zhu Zhu Pets . . . But The Damage Can’t Be Repaired

Last week, in the heat of the post-Thanksgiving holiday buying crush, yet another unscrupulous or incompetent consumer group, so the so-called “GoodGuide” out of San Francisco chose to launch an attack on a high-profile toy, the “Zhu Zhu Pet”, specifically “Mr. Squiggles”. The Zhu Zhu Pet product line is this year’s Must-Have Toy, a perfect target for selling papers and promoting fear. Mr. Squiggles’ “crime” was purportedly the presence of microscopic amounts of tin and antimony above the absurdly cautious CPSIA standards for those elements. GoodGuide (for purposes of this blogpost, let’s call them “MisleadingGuide”) cited Mr. Squiggles for having “elevated levels” of the elements in its hair and on its cute little nose. The offending levels: tin (I can’t find the data anywhere) and antimony, 93 ppm on the hair and 103 ppm on the nose. The federal limits under the CPSIA is 60 ppm.

The MisleadingGuide report was issued on Saturday Dec. 5, and to the CPSC’s credit, it acted promptly today by announcing its intention to swiftly investigate, and later (on the same day), cleared the toys. In response to the storm over its accusations, MisleadingGuide acknowledged that it used a XRF gun to test the surface and did not use the federal wet test methods. Oopsie-daisy! MisleadingGuide apparently regrets its error. Interestingly, the retraction/correction of MisleadingGuide is nowhere to be found on its review of Mr. Squiggles. The MisleadingGuide rating is also unchanged as are the misleading results that MisleadingGuide says it “regrets” but hasn’t gotten around to correcting. Notably, in the small print of one of its disclaimers, MisleadingGuide notes that much of its data comes from consumer group luminaries regularly heralded in this space such as HealthyToys.org and the ever-present Center for Environmental Health. Now that’s some fine company!

This very sorry and sickening episode is the latest instance of consumer group terrorism playing up to an easily panicked and understandably rattled American public. Using the imprimatur granted by their self-appointed role as protectors of public welfare, consumer groups nowadays shoot first and ask questions later. An unskeptical media republishes their garbage without comment, other than to whip up the flames of fear. The cost and the consequence is the random devastation of businesses for “crimes” that are very often imaginary. In this case, the tiny company responsible for this monster hit has only 16 employees. Not exactly a Mattel with a large in-house legal department or the other resources of a mega-company accustomed to being kneecapped by Naderites. A real U.S. success story – brought low by consumer group incompetence and irresponsibility. As everyone knows, there is no recourse for these entrepreneurs as their franchise is damaged mid-Christmas selling season. Dreams dashed, and the consumer groups hardly even blink. Of course, MisleadingGuide does “regret” its error. A bit of cold comfort for the 16 employees at Cepia as they examine the lumps of coal in their Xmas stockings.

Part of the consumer group M.O. is to stoke fear by tossing around figures that no one understands. In this case, they chose some new, unfamiliar elements to create the illusion of irresponsibility by a toy company. Tin? Antimony? I thought the culprits these days were lead and phthalates? No, when those items fade, new threats are manufactured to spread fear and distrust. I should point out that MisleadingGuide is arguing about being 33 and 43 PARTS PER MILLION over the new federal limit.

Tin and antimony are not radioactive, these ultra-amounts are basically undetectable. There is no indication anywhere that exposure to an incremental amount of these elements at this level would be dangerous. However, the new standard is misleadingly portrayed by these unscrupulous or unsophisticated consumer groups as a human health exposure limit, reasoning that anything above the limit is a sign of DANGER. The press is all too willing to make their claims seem legitimate: “Tests in animals have attributed a series of ailments large-scale consumption of antimony, the Department of Health and Human Services’ (DHHS) Agency for Toxic Substances and Disease says. Yet the DHHS also says it does not ‘know what other health effects would occur to people who swallow antimony.’” Ah, the seeds of doubt! Notably, unless you gorge on Zhu Zhu Pets regularly, large-scale consumption of antimony is irrelevant in this case. This kind of reporting hands a “win” to the consumer groups. The losers outnumber the winners by a wide margin.

I think there are many damaged parties in this pathetic episode. Let me list them:

  • You. The American consumer loses EVERY TIME as confidence in our neighbors and in our stream of commerce is nicked again and again by nincompoops who spread salacious gossip and commercial slander without a full and thoughtful investigation.
  • Science. The abuse of science will eventually lead to a mistrust of science. Science misused for the purposes of raising contributions or gathering proceeds from fines or contingent legal fees discredits it as a source of understanding of our world. Our country will lose out to countries not as obsessed with small-minded paranoia.
  • Specialty Markets and Small Business Interests. What kind of crazies want to do business in this environment where consumer group terrorists rule the planet? Business people read these articles and feel an injury to themselves. We all know we could be next. It’s random and unpredictable, since junk science can be deployed anywhere and anytime by the evil tandem of an unquestioning press and unscrupulous consumer advocates.
  • Our National Competitiveness. By allowing consumer groups to pick innocent victims without recourse for the tortious devastation they cause, the incentive to innovate or even trade is sharply curtailed. Businesses seek exits, not growth – some jobs program, huh? The costs imposed on healthy businesses to stay ahead of the maniacs will further cripple competitiveness. As a nation, we will gradually sink into an abyss of irrelevance.

How long must we tolerate consumer group terrorists? I think it’s time for Congress to create a new cause of action against this kind of irresponsible behavior. Someone needs to be accountable for the spreading of misinformation, damaging innocent and honest American businesses trying to create jobs and provide needed products and services to American families and schools. The torts of the consumer group creeps need a remedy. Let’s turn the tables on these fronts for plaintiff’s attorneys and take back our country.

Read more here:
CPSIA – CPSC Clears Zhu Zhu Pets . . . But The Damage Can’t Be Repaired

CPSIA – The TIA Just Wants to HELP You!

FULL DISCLOSURE:
  • Our companies are members of the Toy Industry Association (TIA).
  • We are on the record as opposing the Toy Safety Certification Program (TSCP).
  • The dues of TIA members paid (and continue to pay) for the development of the TSCP, as well as the salaries and bonuses of the representatives mentioned below.
  • The “15 month rule” will soon be released by the CPSC (on or before November 14). It will address, among other things, testing frequency and sample sizes for testing, and is expected to include the so-called component testing rule.

Did any of you watch the lengthy TSCP hearing (video link and text link) at the CPSC on October 14? This hearing was apparently jointly requested by the TIA, Consumers Union (CU) and Consumer Federation of America (CFA). Interesting bedfellows, huh? This hearing provided much to reflect upon. In this post, I will address the issues presented by the TIA’s program and the TIA’s authorship from a small business perspective. I will return to the consumer groups later.

[Some of my readers may be from outside the toy industry and may think "This does not apply to me!" Please bear with me and read on. This may not be your problem TODAY, but it is a sign of things to come.]

TSCP Basics:

The TSCP is a complicated initiative that is difficult to explain succinctly. Here is the document defining the TSCP. You can access the TSCP website here. While I will attempt to summarize it here, you should rely instead on the definitive documents published by the TIA.

The TSCP is a program designed by the TIA to ensure that toy companies comply with law. As Elizabeth Borrelli (Executive Director, TSCP) puts it: “TSCP is a conformity assessment system. It is not a testing program but a comprehensive, effective and efficient system to verify that toy manufacturers have satisfied requirements of the CPSIA (and retailers) and that their toys confirm to applicable safety standards.” The TIA says that the TSCP is a “work in progress”.

The TSCP goes far beyond the requirements of the CPSIA. [The TIA acknowledged this repeatedly at the hearing. For instance, see the video at 134:30 and 149:30.] It is also a “voluntary” program, not a requirement of law. The TIA wants to foster broad acceptance of its initiative. They presented it to the CPSC for the agency’s endorsement. Carter Keithley, President of the TIA, called the need for CPSC support “absolutely crucial”. [Also, see the video at 135:15.] According to the TSCP specifications, the program includes: “1) hazard analysis andor risk assessment for toy product design, 2) factory process control audits and 3) production sample testing to validate that the factory is producing, at the time of sampling, toys that meet U.S. safety standards. These three elements will be verified or audited by accredited certification bodies.”

A few details about the TSCP:

  • Factory Ratings – There are three levels of factory compliance under the TSCP: Tier 3 (non-ISO 9001 factories), Tier 2 (ISO 9001 factories) and Tier 1 (ISO-9001 factories that have met unspecified additional criteria to be established by the TSCP). Mass market factories are highly likely to be Tier 1, and small fry factories are likely to be Tier 3 or Tier 2. The terms below, according to the TIA, are designed to provide an “incentive” for non-Tier 1 factories to raise their compliance to Tier 1 standards. [Too bad for you if you and your factory don't want to incur this expense.]
  • Hazard assessment – This pre-production analysis must prepared by or under the supervision of a responsible officer of the company on a product-by-product basis and must be attested to in writing. [Remember this.]
  • Testing Sample Sizes - Under 3′s: not less than 18 pieces; over 3′s: not less than 12 pieces; big or expensive items: not less than 3 pieces; under 1000 pieces sold per year: sample size TBD; minimum production run: 500-1000 pcs (whatever this means).
  • Sampling procedure – Tier 3 – need outsider to select all samples; Tier 2 – outsider picks samples randomly 4-6 times per year; Tier 1 – The factories select samples themselves.
  • Testing frequency – Tier 1: greater of once a year or every million pieces, plus one extra heavy metals test annually (Max – never more than four times a year); Tier 2: greater of twice-a-year or every 500,000 pcs. (Max – monthly); Tier 3: greater of quarterly or every 150,000 pcs. (Max – every other week). [You read that right.]
  • Security – Samples must have special seals to avoid “adulteration”

The TIA insists that the TSCP was designed with small business in mind, has been vetted by small business interests and has been applauded by small businesses.

What Happened at the Hearing:

The TIA spent a great deal of time explaining the terms of the TSCP. The consumer groups spent their time explaining why this program that goes far beyond the law ISN’T ENOUGH. The CPSC Commission asked a lot of questions and spent a bit too much energy (in my view) complimenting the TIA on their work. One Commissioner (Anne Northrup) pushed back with probing questions about TSCP economics and the intiative’s impact on small business (see the video at 78:49 for about 15 minutes and later at 146:35).

What Does the TSCP Mean for Small Business?

The TSCP, if adopted, would be catastrophic for small toy companies or companies making toys with factories catering to the specialty market (rather than the mass market). Although the TIA denies this point (explicitly), the TSCP significantly favors mass market companies in an almost shameless way. Consider, for instance, the cost of participation in the TSCP. Rick Locker, outside counsel to the TIA, talked about a cost of $65 per item to enter the program. [He noted that for this $65, toy companies "now have $2 million of technology available to them" (123:48). Hey, TIA Members, do you realize what Mr. Locker means? The website they created cost $2 million. That's some fancy website they built with your money.] Upon questioning by Ms. Northrup, none of the TIA spokespeople would admit or guess at the overall cost to participate in the program (84:00 – and check out Northrup’s reaction at 85:15).

What might those costs be? Well, we know it costs $65 per item simply to key the product into the website. Then there’s the cost of the rating of the factory. [The TIA insists that this cost will not be borne by importers but instead by the factory. See video at 150:50. Apparently, this overhead is not passed along to the factory's customers, unlike all other factory overhead.] What might this cost? The TIA provided no estimates. I believe the one-time cost of becoming ISO 9001 is estimated at tens of thousands of dollars from a “standing start”. Likewise, the comparable compliance process with ICTI-CARE (Toy industry Code of Conduct) ain’t cheap. Figure TSCP ratings to cost thousands, and possibly much more, depending on the actions required to make the transition to the new TSCP standards. Then there’s the cost of regular audits and re-certifications. Many of the new requirements will likely lead to on-going, incremental administrative expenses at the factories, suggesting that product costs will float upward on a go-forward basis under the TSCP.

Finally, the TSCP costs will include all the usual safety tests required for each participating item, plus additional testing and processes. I have previously posted typical safety test costs in this space. [Rick Locker cited a cost of $300 per phthalate test in his testimony, as a point of reference.] INCREDIBLY, by publishing the TSCP terms, the TIA has apparently conceded that safety testing might be necessary or desirable multiple times per year. Testing frequency has NEVER been regulated by the U.S. government previously but will be addressed by the “15 month rule” shortly. I believe the TIA’s actions here will provide cover for the CPSC to impose similar testing requirements, despite the obvious market interference. How easy will it be for me, as an industry participant, to argue against testing frequencies put forth by my own trade association? Surely they are looking out for my best interests and would only suggest what’s reasonable and necessary – RIGHT?! Ummm, let me get back to you on that . . . .

Taking all of the above into account, I personally think the per-item cost to “pass” TSCP will be in the many thousands of dollars per item per year. For illustration purposes, however, I think we can confidently use a cost of $5,000 per item (all-in, blended). [Yes, I am predicting a blended cost of $5,000 per item to get this coveted certificate. Quite affordable . . . .]

How would a $5,000 TSCP cost affect you versus Big Toy? To answer this question, we must make some reasonable assumptions. For Big Toy, I am going to assume annual production of 1 million units of a hypothetical toy at a Tier 1 factory. For you, I am going to assume production runs of various sizes, all at a Tier 3 factory (which means you must test each time you produce, since you are unlikely to produce more often than twice-a-month!). For both you and Big Toy, I am going to assume a FOB factory cost of $5.00 per unit.

Here are the numbers:

Big Toy:

  • COGS: $5.00
  • TSCP: $5,000
  • Production Size: 1,000,000 per run (or per year, doesn’t matter under Tier 1 rules)
  • Cost per unit for testing: $5,000 divided by 1,000,000 ($.005, rounded to one penny)
  • New blended cost, including testing: $5.01, or a cost increase of 0.1% – NOT BAD FOR BIG TOY!

You:

  • COGS: $5.00
  • TSCP: $5,000
  • Production Size: Various run sizes illustrated below (as a Tier 3 factory, you will test each lot)
  • Cost per unit for testing: 1,000 pcs – $5.00 per unit; 2500 pcs – $2.00 per unit; 5,000 pcs – $1.00 per unit; 25,000 pcs – $.20 per unit
  • New blended cost, including testing: 1,000 pcs – $10.00 (a cost increase of 100%); 2,500 pcs – $7.00 per unit (40% increase), 5,000 pcs – $6.00 (20% increase); 25,000 pcs – $5.20 per unit (4% increase).

Call me crazy, but I think this is rather favorable to Big Toy. Let’s see, a cost increase of 0.1% versus a cost increase of 4-100%, which is better? Notably, for importers that sell to dealers, these cost increases are MULTIPLIED at retail, only compounding the competitive problem. The TSCP-induced gulf between specialty and mass markets costs will massacre specialty market toys. MASSACRE.

There is simply NO WAY that this program was vetted in any meaningful way by small business. If you were one of the small business reviewers, please announce yourself to my readers by commenting on this post (with name, email and phone number). Let’s have a debate!

There are other factors here that favor Big Toy, such as TSCP sampling methods and sample sizes which will punish small toy companies in more than one way, and TSCP’s required full traceability of components (also found in the RILA-BRC standards).

Even the liability risks under the TSCP favor Big Toy which can afford to provide expensive lawyers to back-up company officers. Notably, the TSCP requires a written personal attestation by a senior company officer of the TSCP product hazard assessment. Do you want to sign this little piece of paper and take on some serious personal liability? If that sounds really good to you, please consider the remarks of Chuck Rogers, Senior Technical Director for the TSCP, at the hearing (139:28): “. . . under CPSIA, when that company official signs that attestation, and it becomes part of what is required to get a safety mark [under the TSCP], I can tell you company officials I have talked to take that very, very seriously and they’re going to be extremely cautious and prudent before they sign that. AND IF SOMEONE DOES SIGN AN IMPROPER ATTESTATION, AND THAT PRODUCT IS LATER FOUND TO HAVE A SIGNIFICANT DEFECT, YOU KNOW, IT WOULD BE WITHIN THE COMMISSION’S PURVIEW, I SUSPECT, TO ASK FOR THAT ATTESTATION.” [Emphasis added.] So, in other words, the TIA is trying to sell this program to the CPSC as a source of evidence to be used against its members and its industry. Love it! Where do I sign up?

A Few More Hearing Highlights:

- Ms. Tenenbaum asked about counterfeit certificates. The continuing interest of the CPSC in the “switcheroo” and other nefarious acts mystifies me. What is the basis for treating me and all other members of our industry as scumbag cheaters? Why is this kind of question even posed? Of course, the TIA only feeds these suspicions by specifying tamper-proof seals on samples. Why would such a thing be necessary, other than a conviction that toy companies are such creeps that consumers and the government can’t only trust them? How often does this kind of fraud happen, and if the CPSC knows about it, why haven’t they acted decisively against the bad guys? Your guess is as good as mine.

- The hearing featured several TIA assertions that small businesses will be so, so grateful for the TSCP. The most surreal sell job was by Chuck Rogers, who illustrated virtually every remark with anecdotes from his days at Sunbeam and Wal-Mart. Very relevant to this topic. . . . Rick Locker twice gave detailed explanations of how small businesses will save money with the TSCP (at 77:30 emphasizing reduced record keeping and at 87:50 emphasizing safety test cost savings). Mr. Locker seemed to confuse the cost of factory audits with the cost of safety tests under the CPSIA – he used an example of 20 customers requiring 20 different tests, thereby multipying testing costs 20x. This scenario makes no sense to me since only certain specific safety tests are required to comply with the CPSA, as amended. You don’t need a different safety test report for each customer – but you might need a different audit report for each mass market customer. Factory audits, notably, are a mass market phenomena, and typically confront small businesses only when dealing with mass market customers.

- The TSCP is good news for you, according to Elizabeth Borrelli (90:40): “If [the TSCP] was significantly additive [to costs], then our membership and our Board wouldn’t support us moving forward with it, frankly.” Feel better yet?

Final Thoughts:

The astounding TSCP initiative crafted by the TIA is a BUSINESS. The TIA, in proposing it, is going into business in competition with certain of its members. This move is troubling for a trade association. In addition, the TSCP adds significantly to the burden of the already excessively burdensome CPSIA. To promote this change to a regulator seemingly predisposed to treat our industry harshly is reckless and shortsighted. It is known, however, that certain toy companies are already planning to take these compliance steps and more. [In response to a question by Commissioner Adler, Hasbro's representative at the hearing confirmed that Hasbro will exceed the TSCP requirements.] Was the TIA acting with the notion that what’s good for Big Toy is good for everyone else? Amazingly, this disruptive program is clearly favorable to only a small handful of TIA members and seemingly disadvantageous to a far larger number of toy companies. [I don't put much stock in the hand waving by TIA representatives at the hearing - show me the detailed analysis proving that this initiative saves money for any small business.] Given the heavy presence of mass market companies behind the development of this program, the mass market benefits and focus come as no surprise (to me).

It is worth noting one more full disclosure item: Earlier this year, I asked the TIA to help defray our advocacy expenses in opposition to the CPSIA. Despite their massive lobbying budget, they turned me down for several reasons. In a remarkable phone call, they explained to me that, among other things, (a) the TIA would not contribute to the expenses of the Alliance for Children’s Product Safety unless I would allow them to exercise control over its activities, and (b) they believe the law would never be changed and preferred to channel the TIA’s “limited” resources into efforts to live with the law. [There is obviously a gulf between my views and theirs.] In any event, whether it is cause or effect, the TSCP seems to have attracted a multi-million dollar investment by the TIA and essentially it appears that the TIA burned the bridges behind it – promoting the TSCP now is a primary focus of the TIA.

For those TIA members who have gotten this far in this long post, you may want to ask a few questions of TIA officers and board members.

Read more here:
CPSIA – The TIA Just Wants to HELP You!