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WEB EXCLUSIVE: How Does The CPSC Reform Act Affect Your Vending Business?

by Philip Brilliant, A&A Global Industries
Posted On: 4/14/2008

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COCKEYSVILLE, MD -- On February 25, Senator Mark Pryor (D-AR) sponsored the Senate's version of the Consumer Product Safety Commission Reform Act of 2008, which he hails as the legislation needed to let American consumers be sure that the toys they purchase are safe. As part of the legislative process, the House of Representatives already passed a similar version, HR 4040, also called the Consumer Product Modernization Act. Like all Federal legislation, the Senate's bill (SB 2663) is filled with a multitude of specifics regarding the production, testing and sale of toys. Conceived after the nightmarish recalls of retail toys in 2007, it passed on March 7.

Many elements of the new bill focus directly on the CPSC, such as increasing the organization's funding to add personnel and upgrading its laboratories. Other components of the legislation, including strict testing standards by third-party labs and streamlined procedures in the event of a recall, are intended to create a better-functioning organization. However, there are some pieces of the new legislation that may give bulk vending operators and suppliers pause, such as strict labeling requirement and increased fines and penalties for selling unsafe products.

While our industry has many concerns regarding the labeling requirements of both the House and Senate versions, the immediate and most urgent question is: Regarding safety, how does this legislation impact the bulk vending industry specifically, and what do operators need to do to ensure that they are in compliance?


CPSC Reform Act Of 2008

Highlights of the Consumer Product Safety Commission legislation include:

Bolstered funding: Additional funding for the CPSC for seven years, starting at $88.5 million in 2009 and increasing at a rate of 10% per year through 2015. For 2009 and 2010, an additional $40 million is authorized to upgrade CPSC's laboratories, and $1 million will be spent on researching the safety of emerging nanotechnology in products.

More manpower: An upgrade of the CPSC's organizational rules, allowing a two-member quorum to conduct official business for nine months. At present time, the CPSC lacks a quorum and cannot conduct business that requires action, including mandatory recalls. The bill also restores the commission to five members from its current three members.

Fewer obstacles: Upgrades and streamlining the product safety rulemaking process by eliminating a mandatory "Advanced Notice of Proposed Rulemaking" procedure, which critics say provided early warning to toy manufacturers.

Lead free: A virtual ban on lead in all children's products.

Third-party certification: A mandatory third-party safety certification for all children's products, though with CPSC approval, in-house labs will be allowed to test products. Mandatory certifications are based on current toy safety standards set by ASTM International, an independent standard-setting organization.

Incident tracking: The creation of a database to include any reports of injuries, illness, death or risk related to consumer products, to be submitted by consumers, local, state or national government agencies, childcare providers, physicians, hospitals, coroners, first responders and the media.

Tougher penalties: An increase in civil penalties, now up to $20 million from a former cap of $1.8 million. Increased criminal penalties of up to five years in jail for those who knowingly and willingly violate product safety laws.

Delegated power: Allowing state attorneys general to obtain injunctive relief on behalf of residents to enforce product safety laws.

Whistleblower programs: Whistleblower protection for employees of manufacturers who offer information regarding problems along a supply chain.

Labeling: Requiring manufacturers to label children's products with tracking information that can be used by consumers and retailers in identifying recalled products, and making it unlawful for retailers to sell them.

Supply-chain awareness: Requiring companies to identify subcontractors in the supply chain.

Both the House and Senate bills call for penalties of up to five years in jail for anyone who knowingly or willingly violates product safety laws. Quite simply, if you are selling toys or novelties out of your machines and do not know that they are safe, you are in danger of federal criminal penalties!

We all know that the bulk vending industry is no stranger to Federal safety recalls, public concern or bad press. In July 2004, we were the subject of the largest recall in U.S. history, which encompassed 150 million pieces of toy jewelry. This was the catalyst for change in the way we do business. It was through our industry's bout with the CPSC that federal guidelines were developed for lead tolerances and standards, intended to provide safe toys to the American vending consumer. 

Those new standards prompted an unprecedented re-vamp of testing procedures and protocols that suppliers must employ, and in response to deep concern the National Bulk Vendors Association adopted its Toy Safety Policy. The directive was then (and is now) clear: Buy only from suppliers who test their products and provide adequate documentation to prove it. The vending industry does not "fly under the radar," and any operator purchasing products from unreliable suppliers is naïve to think that he or she is immune to the risks and significant penalties from federal, state and local municipalities.

Offering products purchased through irregular supply chains has always been a risky proposition. Many were never intended for sale in U.S. markets, and are extremely difficult to trace back to the original manufacturer. Because there is little accountability, operators may end up assuming full responsibility for the safety of these "gray-market" products.

Everyone is concerned about safety, not just Mark Pryor or the U.S. Congress. We all have children and families, and want the best for them as well as our customers. The vending industry provides instant gratification at very low price points that bring smiles, imagination and fun to millions of Americans, regardless of age. We all want that done as safely as possible -- to promote our machines and additional sales, and to support the locations our machines are in. Our livelihoods depend on it.

Much still has to happen to SB 2663 and HR 4040 -- negotiations on language, passage through a number of other committees and, of course, it needs to be signed into law by the President.  However, no matter what, operators now more than ever must make sure that they buy with confidence, so that the vending public will, too.

An operator who sells untested products is not only putting his customers and business at risk, but also is gambling the reputation of our industry. As we all know, the media has been quick to jump on instances of vended products that are suspected to be unsafe. Each and every operator now has an added responsibility to the bulk vending community to only offer products that meet the new guidelines.

Buy from reputable suppliers. Get your testing reports. Ask questions.

PHILIP BRILLIANT has been in the bulk vending industry since 1995, serving as a vice-president of A&A Global Industries. He has managed facilities for the company in New York and Los Angeles, where he worked directly with operators. Recently he was relocated to A&A's corporate headquarters outside of Baltimore. A&A global is a leading supplier of merchandise and equipment to the bulk vending industry.

CPSC Reform Act of 2008 Passes Senate By Wide Margin

WASHINGTON, DC -- The Consumer Product Safety Commission Reform Act of 2008 (SB 2663) passed the Senate on March 7 by a 79-13 vote after just four days of debate.

Despite aggressive lobbying on the part of the toy industry as well as criticism of the legislation by the White House, the bill passed both the Senate and House with strong bipartisan support and "veto-proof" margins. The House version of the bill passed in December by a 407-0 vote.

The bill, which is sponsored by Sen. Mark Pryor (D-AR) and managed by Sen. Amy Klobuchar, (D-MN), was initiated after a series of high-profile toy recalls including those of bulk vending products.

At the heart of the legislation are requirements that place stricter controls on monitoring toy safety, strengthen the CPSC's powers and dramatically increase the organization's budget.

"The CPSC is crippled under budget restraints, mounting imports and thousands of new products entering the marketplace. As a result, we've seen endless recalls and unnecessary deaths and injuries," Pryor said. "My legislation allows parents and the CPSC to fight back against the tide of dangerous toys and products. It provides new safety safeguards that emphasize resources, accountability, disclosure and testing -- from the factory floor to the store shelves. I appreciate the broad, bipartisan support behind this bill."