The CPSC's Newest Tactic: Intimidation
Recently the U.S. Consumer Product Safety Commission (CPSC) took the first steps in more than a decade toward banning the sale of a type of product. A series of stop-sale orders on high-powered, rare-earth magnets were issued to manufacturers, the first time the commission has proposed a ban on an entire product category since 2001.
We've been reporting on this story since November 2011, when the commission issued a broad warning regarding the ball bearing magnets. At that time, the commission was working with the makers of Buckyballs to try and educate consumers. Less than a year later, the CPSC abandoned collaboration for regulation. The result: 11 of 13 companies voluntarily pulled their products from shelves rather than face fines. The two that didn't are facing government lawsuits that could put them out of business.
There's a belief among some that these actions are an aberration, that the CPSC is singling out this particular product because it is dangerous, but that would be ignoring trends in recent history. Since 2007, the "Year of the Recall" when more than 400 items were recalled, many of them children's toys or items made in China, the CPSC has been more aggressive in monitoring, penalizing and publicizing offending items. As Inez Tenenbaum, chairwoman of the CPSC said, "I have made it clear to our staff that all of our regulatory options should be on the table when we seek to protect consumers from harm."
Those regulatory options include bans, which have not been used often, as well as recalls, which for the past five years have been issued almost daily. Take a look at an example from yesterday: plastic water bottles were recalled by H&M because they posed a potential choking hazard. In 2,900 products, there was one instance of a spout coming off a bottle. There were zero incidents of injury.
That is a modern trend. Many recalls involve no injuries, only the possibility for damage to occur. And related to this is another modern trend, a phrase that appears in virtually every product recall you will ever read: "voluntary recall." Nearly every release from the CPSC is done voluntarily in conjunction with the product manufacturer. Now, why would these businesses voluntarily recall their products even when there have been no injuries, even when the chance of injury is miniscule?
Ask Buckyballs what happens when you don't volunteer.
The commission's greatest regulatory option is not the recall, or the regulation, or the ban. It's the public spotlight, and the ability to point to a company and say "they create products that hurt children." You see it on the news every day, from Buckyballs to Bumbo Baby Seats. Even if consumers feel the regulations are unnecessary, as many people in the magnet case do, a company cannot win an argument about children's safety in the court of public opinion. Both Buckyballs and Zen Magnets are continuing to sell their products and fighting for their businesses, but if they lose their lawsuits, it is almost assured both will go bankrupt. The other 11 companies that voluntarily pulled their products, due to the loss of U.S. sales, likely face the same outcome.
What does this mean for suppliers and distributors? Regardless of whether you make, sell or import an item, you need to protect your business by meeting all federal guidelines and compliance requirements. It's also important to remain aware of CPSC's actions regarding relevant product categories; don't be surprised if you see more focus on drinkware after the high-profile H&M recall.
Unfortunately, there is no option to resist the commission's aggressive (some would say bullying) tactics; between the cost and the bad press it's a no-win proposition. But there is one thing you can do: contact the CPSC or your local politician and let them know how these proactive measures are detrimental to small business. It is maybe the fastest and easiest thing you can do to help your business and your industry.