Congress passed the Consumer Product Safety Improve-ment Act of 2008 (CPSIA) in response to the millions of lead-contaminated toys imported from China that were recalled in 2007. However, CPSIA and its implementation have resulted in confusion for retailers, particularly after the Consumer Product Safety Commission (CPSC) decided to delay enforcement of the law’s lead testing and certification requirements until February 2010.
It is important to clarify that this stay does not let retailers off the hook—the CPSIA’s lead content limits for children’s products are in effect now, and the penalties that CPSC can impose to enforce those limits increase substantially in August 2009. Moreover, CPSC cannot stop state attorneys general (AGs) from independently enforcing CPSIA’s lead standards.
These developments, combined with the growing role of AGs as business regulators, mean that retailers should take measures now to ensure compliance with the lead content requirements of CPSIA.
The limit of the CPSC’s temporary stay
CPSIA applies to a broad range of products intended for children 12 years of age or younger, including clothing, shoes, jewelry, toys, books, and games. Among other things, the law:• Reduces the level of lead children’s products may contain to 600 parts per million (ppm) (.06%) as a portion of a product’s total weight until August 14, 2009, when that standard will decrease to 300 ppm (.03%).
• Requires that both importers of foreign-made children’s products and domestic manufacturers have their products tested and certified by accredited third-party laboratories for compliance with federal lead standards (effective February 14, 2010).
• Substantially increases penalties CPSC may impose for violations of lead standards to a maximum of $100,000 per violation (from $5,000), with an absolute maximum penalty of $15 million (from $1.25 million). CPSC could try to apply these penalties, which become effective August 14, 2009, to violations of lead content standards for children’s products sold by retailers even during the stay of testing and certification requirements.
Although only importers and domestic manufacturers are required to satisfy testing and certification requirements for their children’s products, it is important to understand that the lead content requirement has not in any way changed retailers’ obligations.
Retailers still are prohibited from selling children’s products with a lead content of more than 600 ppm until August 13, 2009—and, after that date, more than 300 ppm—and CPSC has issued recalls of children’s products based on these standards subsequent to its stay of the testing and certification requirements.
The growing role of AGs
Congress also specifically allows AGs to enforce CPSIA requirements. While AGs generally must give CPSC 30 days’ notice before bringing a case under CPSIA, they need not do this if they determine that immediate action is required. Moreover, because AGs are state government officials, the decision of the CPSC—a federal agency—to delay its enforcement of testing and certification requirements is not binding for AGs, who have authority to enforce those requirements, as well as the lead content standards.Indeed, even before CPSIA expressly invited AG enforcement, AGs had begun to actively investigate and prosecute toy companies and sellers of children’s products. For example:
• 38 AGs, including the AGs of Arizona, Florida, Illinois, Massachusetts, Ohio, and Pennsylvania, reached a $12 million settlement with Mattel as a result of its 2007 recall of 2 million lead-containing toys. The California AG conducted a separate investigation, reaching a $500,000 settlement.
• The New York AG recently investigated retailers that sold lead-containing children’s products, resulting in those retailers’ accepting a strict new code of behavior, including having their suppliers certify that their children’s products comply with lead content standards.
• The Illinois AG has issued warnings to consumers that lead levels in various children’s products violate product safety laws and publicly threatened to sue at least one company to force compliance with those laws.
Additionally, consumer groups still may purchase children’s products from retailers and test those products for compliance. Findings from these groups often impact AGs’ decisions regarding whether to initiate an investigation. With this in mind, retailers should focus their attention on what they need to do to comply with the law.
An ounce of prevention
Retailers should take steps to ensure that the children’s products they sell do not violate lead content standards and create a record of these steps in case they are required to respond to a CPSC or AG investigation. Retailers should consider taking the following actions:• Ask importers of children’s products made overseas, as well as domestic manufacturers, to develop and implement a reasonable testing program for their products.
• Ensure suppliers are not testing just one product from one shipment but rather are testing products randomly to include various colors and sizes, as well as items from different factories and different batches made at different times.
• Ask importers and domestic manufacturers to confirm test results in writing.
• Do not take answers at face value—ask questions and conduct follow-up to ensure continued compliance with applicable standards.
• Research your suppliers’ laboratories and determine whether the laboratories have been certified or have any issues with authorities.
• Consider independent random testing of children’s products to be certain they are in compliance.
• Keep detailed records of correspondence, as well as representations, certificates, and other documents from suppliers, regarding their testing processes and the lead content of their children’s products. Retailers may also consider insisting that their suppliers add them as “additional named insureds” or to include “vendor endorsements” in the suppliers’ products liability insurance policies, as these policies may provide insurance coverage for financial penalties that retailers might incur if those suppliers’ products violate CPSIA.
• Familiarize yourself with resources to keep you up to date regarding changes to the law—helpful starting resources include the Web sites and publications of the CPSC and AGs, as well as trade associations.
CPSC’s stay of enforcement of the testing and certification requirements is only temporary. Even while it is in effect, the lead content standards are still applicable and become even more rigorous in August 2009.
Establishing best practices now, and continuing to emphasize them when the standard becomes 300 ppm, can help retailers identify issues with their suppliers and their children’s products and, if an investigation should occur, resolve it without protracted and expensive litigation.
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