Tag Archives: U.S. Consumer Product Safety Act of 2008

Children’s Product Companies Are Getting Buried By High Cost of Compliance

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With the economy going south the Consumer Product Safety Improvement Act of 2008 could not have come at a worse time for small businesses that manufacture or import children’s products.

The real question on the minds of most small businesses involved with children’s products is – will the new chair of the Consumer Product Safety Commission, Inez Tenenbaum, bring relief to small business or will she simply be the enforcer of the new Consumer Product Safety Improvement Act (CPSIA) of 2008 and force most out of business because of the high cost of legal compliance?

The first thing Ms. Tenenbaum will need to do is clarify the agency’s position regarding testing, labeling, tracking and it’s current ban on the sale of existing inventories.  According to the CPSIA of 2008 all children’s products will have to be tested for safety by an independent testing lab certified by the CPSC.  Warning Labels will now need to be on the product, packaging, Internet sites and catalogs and comply with a specific layout, type, language, color and placement.  Tracking must be on each product and show source of product, date manufactured and batch or run number.

If Ms. Tenenbaum simply chooses to be the enforcer of the CPSIA of 2008, most small children’s importers and manufacturers will be forced out of business because they are barely surviving due to current recession and the high cost of legal compliance will, likely, be the final nail in the coffin. 

Those choosing to continue to import and manufacture children’s products will not have the luxury of easing into the market place.  They will need deep pockets to support their efforts and a marketing plan that will have be aggressive so they can sell enough products to offset the increased investment cost.

Administrative Costs For Children, Household And Recreational Products On The Rise

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Let’s face it the Consumer Product Safety Commission has come under increasing fire from congress and the public because of the overwhelmingly large number of product recalls over the past few years – especially for foreign products imported into the U.S. It has become obvious that CPSC lacked the resources to adequately oversee all the things necessary to keep the American public safe.  As a result, on August 14, 2008 the President of the United States signed legislation that will reform the laws and regulations governing the CPSC. 

The U.S. Consumer Product Safety Commission is the federal agency responsible for overseeing product-safety recalls of toys, household products, recreational equipment, some vehicles, and consumer products not under the jurisdiction of other federal agencies.

Because we provide product liability insurance to a large number of manufacturers, importers and distributors of children’s, household and recreational products, I was particularly interested in how much compliance with CPSA of 2008 was going to cost in order to comply.

Below are 4 new administrative costs for businesses that manufacturers, importers and distributors of children, household and recreational products must bear:

  1. Permanent markings must be on all products to help identify them in the event of a product recall;
  2. Businesses must provide registration forms to consumers and keep accurate records of registered consumers;
  3. All children’s products must be tested by an independent testing company before they can be imported or distributed;
  4. Warnings that are on or with the products must also now be included in the advertising.

Business owners that do not feel compelled to comply with the new CPSC statutes are subject to much harsher penalties.  Civil penalties will rise to $100,000 per violation and a cap of $15,000,000.  Criminal penalties have also increased permitting imprisonment and forfeiture of assets.  Also, state attorney generals can sue companies for violation of CPSC statues.

While we believe that more needed to be done to protect the American public from the high number of unsafe products being imported, we also understand that the administrative costs for small businesses in the U.S. continue to make it more difficult for these businesses to be profitable and stay in business.

The U.S. Consumer Products Safety Improvement Act of 2008 Mandates Searchable Database for Consumers

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One of the most significant changes of the U.S. Consumer Product Safety Improvement Act of 2008 is the creation of a searchable database (Section 212) for consumers by the Consumer Product Safety Commission.  This one change could significantly impact a company’s reputation and product liability litigation.

CPSC is required to establish a searchable data base by October 2010 on the internet that consumers can access.  The information provided will identify the name of the product, the manufacturer’s name and provide reports on deaths and injuries caused by the product.  In order to make sure that no information on the website is materially incorrect or trade secrets are not exposed, manufacturers will be allowed to review and comment on the information before it is posted on the database.

This one change should help potential U.S. importers and distributors of foreign products to identify problem foreign manufactures and as a result, reduce the number of unsafe products brought into the U.S.  It may also increase product liability litigation because U.S. consumers will be able to identify more easily whether their product in question has a history or potential for harm and assist with gathering important facts to assist them with their product liability lawsuit.