A Patchwork of Protection

Get the lead out! The well known phrase became last year's imperative, as record numbers of recalls raised Americans' awareness of consumer protection's fragility. While Congress slowly moves to beef up the Consumer Product Safety Commission's budget and power, many states chose not to wait.

Most voters support safer kids' products, making it a popular as well as principled move. And when states address the same problem differently, the results can provide data for creating national policy. Meanwhile, vendors are stuck ensuring that their offerings comply with dozens of often incompatible and changing regulations.

While it was the toy recalls that grabbed the headlines, the resulting product safety standards impact the broader gift industry too. “Ceramics and jewelry are the ones I worry most about,” says Pete Day, chairman of Oak Patch Gifts, Eugene, OR. But these laws can apply to almost any consumer product. Day added, “From my perspective the whole thing is a nightmare. We try our hardest to keep track and still feel like we're falling afoul of it right and left.”

Fortunately, help may be available: the Gift & Home Trade Association held a presentation for vendors at the July Atlanta market, and scheduled a speaker on the topic at its November conference.

Washington state enacted the most stringent toy-safety standards in the nation, according to State Legislatures magazine. (Though California's standard is stricter on cadmium). As of July 1, toys that have too much lead, cadmium and phthalates (plastic softeners) will be banned. According to the Wall Street Journal (WSJ), the Washington law reduces the allowable level of lead in toys and other goods to 90 parts per million (ppm) — possibly as low as 40 ppm, the limit recommended by the American Academy of Pediatrics. That is far below the current federal standard of 600 ppm. Manufacturers of children's products must also report to the state's Department of Ecology whether their products contain chemicals “of high concern.” The department will draw up a list of about 50 such substances over the next year, according to Reuters.

Phthalates are scheduled for a ban in California next year. The European Union already has restrictions on phthalates, as do 14 other countries. Other states with tightened safety standards include Connecticut, Illinois, Maryland, Michigan and New York. Maine passed a strict lead standard but does not require testing. New Jersey and Oregon ban the sale of recalled toys. In all, 29 states have such laws on the books or, like Vermont, are considering them, according to the WSJ . And it's not just lead: of such laws under consideration, 24 regulate lead, 18 cover phthalates, 10 limit mercury, and 17 address a variety of other potential toxins, including bisphenol-a.

It's not obvious from summaries like the one above why vendors can't just comply with the strictest state's standard; one they may feel is excessive, perhaps, but not any more confusing or onerous than a federal standard with the same criteria. The answer is two-fold: testing and labeling. Each state's law requires a different testing procedure; not only is this costly and time-consuming to perform, each one can yield significantly different results; so vendors can't assume that a product that meets a seemingly more stringent threshold on one test will beat even a far higher number on another. As for labeling, since each state requires labels on different products intended for different audiences, in different wording, product destined for each state must be labeled separately. From that point of view even a federal standard far in excess of what vendors favor would be preferable to the current arrangement. However, the federal standards currently under discussion do not address labeling.

Rob Herriot, director of international and government relations for the Toy Industry Association, explains. “You can't necessarily define strictness; you have to look at the protocols. They have different testing requirements. [For example,] the European standard is 90 ppm and the US is 600 ppm, but the EU is a soluable standard and the US is a solid weight standard. The testing protocols are different.” Even within a soluable standard, says Herriot, whether or not you agitate the solution, and for how long, can yield different results. “The tests you use are very precise, they make the standard,” Herriot said. “The numerical value is important, but the testing protocol that backs it up is just as important. There's a lot of detail here that is missed in the state laws.”

Yet another problem is: what's a child or children's product? Differing definitions of how old a child is and whether a product must be aimed at children or within their reach can make a big difference.

It's not just vendors feeling pressure from these new laws. Retailers in states with stricter standards may find vendors no longer willing to supply them with product, while other proposed rules stick retailers with unwieldy amounts of paperwork. Jude LaRene, the owner of Washington-based retailer Izilla Toys, told Washington TV station KEPR, “What has happened is we've asked them to do a unique set of tests for Washington. And for a lot of the smaller companies, it's just not economically viable; they just can't make it work here.” Day confirms that Izilla is right about how vendors think. “It's not economically feasible to do it just for the state of Massachusetts. Let's say you have a really broad line like we do, with hundreds of items in it. You might say, how much am I really going to sell to California?”

Kathleen McHugh, president of the American Specialty Toy Retailing Association (ASTRA), told Gifts & Dec, “We're seeing some unique and different labeling requirements from state to state; we're seeing different chemical bans, and I think that the reaction the manufacturers are going to have is that they will meet the highest federal standards. If a state deviates from that they will decide whether they can afford not to ship to that state. […] There are some states out there passing legislation and I really don't think that they understand what it is that they're doing. We rally have witnessed state legislatures picking up a piece of legislation and within two or three weeks, pushing it through without consulting the industry that it effects.”

Some regulations may even hold retailers as well as vendors responsible for unsafe products. While aimed at big boxes whose leverage may force cost-cutting at the expense of quality, such laws could put smaller retailers in jeopardy. And while single stores may find it easy enough to learn their state's regulations, selling across state lines (such as via a website) could become a bureaucratic nightmare.

The majors are already reacting: Retail chains Wal-Mart and Toys “R” Us debuted plans to cut the lead in their toys from 600 ppm in surface coatings to 90 ppm. More toys will have independent safety testing. And the retailers will virtually eliminate phthalates in toys by the end of the year. Target eliminated PVC (which often contains phthalates) from its lunchboxes, infant bibs, children's utensils and changing tables.

In a tight economic climate, with Chinese prices rising and expensive gas eroding discretionary spending, the cost of complying with new regulations will be borne by the end shopper. Says Day, “Sooner or later consumers are going to end up paying the price of this. All these consumer protection laws are adding costs to the supply chain. Eventually, these are going to be passed back to the consumer in the form of price increases.” Ted Teele, CEO of national gift rep group OneCoast, Pittsburgh, PA, concurs. “It makes sense to have testing, documentation and safety standards. But it doesn't make sense to have different standards for each jurisdiction, since that would enormously increase costs to consumers. Complying with dozens or perhaps hundreds of different rules and standards would also likely drive many companies out of business — limiting competition and consumer choice.”

In December 2007, the House of Representatives passed a bill tightening safety standards; the Senate passed one earlier this year. However, the two bills are different, so they must be reconciled in the conference committee and sent back for Congress to vote on the changes. The resulting law will likely include mandatory testing and traceability, concepts which Herriot says TIA originally proposed. On an issue where so much is in the details, however, until the final amendments are decided, the impact of the Federal law will be difficult to assess: whether, for example, the bill will restrict other chemicals or just lead; how big a budget increase the CPSC will receive, and how harsh the penalties will become. (Criminal charges or personal liability for company officers have been discussed.)

McHugh says, “I think the new proposed federal standards are sufficient. They are lowering lead in products, that's for sure. I'm not sure what it is doing to address BPA or phthalates but I think the biggest issue is testing and reporting and the recall system. All those little breaks […] are going to be fixed.”

If the federal standard had been stronger, maybe states wouldn't have passed their own laws. “If the Federal government would do something I would gladly defer to them, but they aren't, so we have to,” said Illinois Rep. Elaine Nekritz, according to the WSJ. But now that they have, wouldn't state laws that are stricter than the country's stay in play? That depends on the language of the federal legislation. Herriot explains that federal law supercedes state law when the Federal government takes specific action. In a case where the Federal government has not taken specific action, the state law would stand, but once they've done that, he says, “we suggest that that should be the uniform national standard.”

McHugh says, “We know that states have the ability to supercede and be stricter, but we're hoping we can come out of this with one federal standard so that everyone knows that the toys that they buy are safe.”

The Washington, DC-based U.S. Public Interest Research Group (PIRG), an environmental and consumer protection organization, and its state affiliates have led the drive for stricter standards. Ed Mierzwinski, consumer program director, told Gifts & Decorative Accessories, “U.S. PIRG opposes additional federal preemption of state consumer laws in the new CPSC Reform Act. […] Federal law should always serve as a floor of protection, never a ceiling. However, under current CPSC law, anytime Congress enacts a new federal toy safety standard, further state action in that area is already preempted or prohibited. […] However, in the case of toxic chemical phthalates — the current provision under consideration by the Congress is an exception to this general law, and would allow further state action. […] Because the states can always act quicker — we want to maintain that right.” PIRG also opposes expanding the current preemption regime to new areas, such as the anticipated third party testing requirement.

Herriot proposes a different approach for the states to take action on product safety without producing confusion. “If [...] you analyze what occurred in the recalls, the real issue was not the standards themselves, but a failure to conform with the standards, [...]” he says. “States should look at enforcement[...] I believe it was Delaware that took that approach. If states are concerned that the Federal government is not enforcing it, they should adopt the federal standards themselves, so that they have the power to enforce them themselves.”