Child Product Safety Law Signals Changes for Home-based Business Owners, Crafters
Revisions to a long-standing consumer safety act mean big changes for many small business owners. Designed to quell concerns of U.S. parents after recent toy safety issues, the new requirements are part of the Consumer Product Safety Improvement Act (CPSIA) of 2008, which added certification and testing requirements for certain products subject to federal standards or bans.
The law, championed by the U.S. Consumer Product Safety Commission (CPSC), requires certain testing and certification requirements for manufacturers, vendors and importers of regulated products intended for children 12 years old and younger. Among other things, the CPSIA bans lead and phthalates used to soften plastic in toys, mandates third-party testing and certification for all toys and requires toy makers to permanently label each toy with a batch or production run number.
Although larger manufacturers will incur expenses associated with the change, the new requirements will have even a bigger impact on Indiana small business owners, explained Phil Fowler, a partner with the Bingham McHale law firm.
“Many home-based and small businesses are rightly concerned about complying with the new law,” Fowler said.
While most of the testing requirements won’t go into effect until February 2010 as a result of a government-issued stay, the tracking label requirements apply to children’s products manufactured on or after August 14, 2009.
“They have a few months to get the necessary labeling and testing done, but they need to be proactive and get legal counsel now,” Fowler explained.
The cost of mandatory testing is the primary concern for many crafters and home-based business owners. To assure compliance with CPSIA, lab charges can range from $300 to $4,000 per toy or product unit. If a hand-sewn garment is being sold, for example, every button, zipper and fabric must be tested individually.
Because of the law’s rigidity, for many of these work-from-home entrepreneurs, the choices are to either violate the law or cease operations.
Faced with this decision is Jodi Marchal, owner and operator of Wallababy, an Indiana home-based company that creates and sells custom infant slings and wraps.
“The cost of testing has been our greatest concern,” Marchal said. “Certified labs in the U.S. are very expensive. Every one of our fabrics needs to be tested, and not only that - every color within the fabric. It has also been difficult to determine our batch testing requirements.”
To keep Wallababy compliant, Marchal plans to send a sample of each of the 30 fabrics used in her slings for testing and plans to receive counsel from Bingham McHale. She hopes it will not be an ongoing business expense.
“With the stay of third-party testing that passed recently, we are hopeful that the upcoming year will bring exemptions to the third-party testing requirements,” Marchal added.
The law, designed to protect the United States’ most vulnerable consumers, has the potential to permanently change the nation’s diverse retail market.
“Ultimately, unless the law is modified, many handmade children’s products will basically be illegal in the United States,” Fowler said. “Many of the products sold online or at craft fairs will be vulnerable to law suits, and lots of small business owners won’t be willing to take the risk of continuing sales if they can’t afford to pay the high testing costs.”
Also impacted by the law are secondhand stores and consumers who resell new and used children’s products online through Web sites like eBay and Craigslist. Although they aren't obliged to test the items they sell, they might be subject to liability if any of their products are recalled or found to be non-compliant.
“Business owners need to understand that they bear the responsibility of compliance,” Fowler added. “There’s not a ‘one-size-fits-all’ solution. Getting legal counsel on the front end of this process will not only reduce the risk of civil and criminal lawsuits, it will save the business money in the long run.”