Legal Review: New Product Safety Law Imposes New Requirements in Direct Ads for Toys1 Oct, 2008 By: Response Contributor Response
On August 14, President Bush signed the Consumer Product Safety Improvement Act of 2008 into law. Responding to public alarm over the recent spate of toy recalls involving millions of products and addressing criticism that the Consumer Product Safety Commission (CPSC) was not adequately equipped to carry out its mission of ensuring product safety, the Improvement Act is the most dramatic overhaul of consumer product regulation and enforcement since the creation of the CPSC in 1972.
Kerrie L. Campbell
More than a law banning lead in children's products — a predominant news headline — the Improvement Act significantly strengthens the CPSC's resources and structure, almost doubling the agency's budget over time, substantially increasing civil penalties and creating powerful new enforcement tools. Manufacturers and sellers of most consumer products will have to come to grips with many new regulatory requirements and enforcement initiatives, including:
- 1. Rigorous lead restrictions for children's products
- 2. Mandatory third-party testing and certification of toys and children's products
- 3. A ban on phthalates (chemicals used to soften plastic) in children's toys
- 4. Mandatory infant products registration
- 5. Conversion of a voluntary toy safety standard to a mandatory standard
- 6. Supply-chain identification
- 7. Prohibition from exporting recalled products or substances, without importing country notification to the CPSC that it accepts the product
- 8. Increased civil penalties: a maximum of $100,000 for a single violation (up from $5,000) to a maximum of $15 million for a series of related violations (up from $1.825 million)
- 9. Expanded disclosure of information supplied to the CPSC
- 10. Creation of a public, Internet-searchable injury information database
- 11. Enforcement by state attorneys general
- 12. Whistleblower protections
Retailers and marketers may be most immediately impacted by the new requirement for labeling in direct sales advertisements for children's products. Under the Improvement Act, any direct sales advertisement for a toy or game for which a choking hazard label is required must include a similar cautionary statement on or immediately adjacent to the advertisement. The labeling requirement becomes effective within 120 or 180 days from enactment.
Cautionary statements or warnings required by the CPSA must be "prominently displayed" in advertisements on Web sites by December 12 and are required in catalogs or other printed materials by February 10, 2009. The CPSC has been directed to make regulations concerning the size and placement of such cautionary statements by November 12 — several months before the implementation date for labeling in catalog and print advertisements. If the agency misses this date, it has the discretion to provide a grace period of up to 180 days.
The new law takes into account the attenuated position of the retailer from product labeling. First, a manufacturer, importer, distributor or private labeler must inform the retailer of any cautionary statement applicable to the product. Second, a retailer will not be found in violation of the law if it has requested this information and the manufacturer, importer, distributor or private labeler has either provided false information or failed to provide the information. Direct response marketers must be sure to request the labeling information and to document the request and response to ensure compliance with the new law.
In terms of enforcement, the advertising labeling requirements will be treated as a consumer product safety standard under the CPSA. The publication or distribution of any non-compliant advertisement will be considered a prohibited act subject to CPSA penalties.
Retailers should also be aware of new restrictions on the sale of recalled products. It is now unlawful for anyone to sell or offer for sale any consumer product — not limited to children's products — that is subject to a voluntary corrective action (such as a recall) or is designated a banned hazardous substance under the FHSA. This creates additional pressure to provide early notice to retailers of corrective actions that the retailer may have had little, if any, involvement in developing or implementing.
Kerrie L. Campbell is a partner in the Washington, D.C., office of Manatt Phelps & Phillips LLP. She can be reached via E-mail at firstname.lastname@example.org.