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Testing Kids' Toys Could Break Small Businesses

Posted by Gayle Kesten Friday, Jan 23, 2009, 10:47 AM ET

The Consumer Product Safety Improvement Act, set to become law Feb. 10, has the right idea at heart: to ensure children's toys are safe for them to play with.

The CPSIA, enacted last year after all of those scary recalls of toys made in China, prohibits kids' products from being made and sold if they cross a certain threshold of lead containment and phthalates (used in glue, paint, plastic, etc.). So far, so good. The act also stipulates that all toys and clothing are third-party tested to ensure compliance, and that means each separate piece of a single toy (buttons, paint, etc).

And that's where small businesses, many of which are already struggling, take issue. It's not the testing, per se, they have a problem with. Rather, it's the cost of testing, which they say will run them upward of hundreds, even thousands, of dollars per toy and -- especially in this economy -- put them out of business.

"The safety standards are perfectly reasonable, but the testing costs are not sustainable for a microbusiness," said Dan Marshall, founder of the Handmade Toy Alliance, in an interview with CNNMoney.com. "There's no sense of scale, no exemptions based on the size of the business. It doesn't make sense for someone who's knitting kids' hats in their living room to pay hundreds of dollars to test each hat."

The Handmade Toy Alliance, which set up a Facebook page and is urging people to write to their legislators, maintains the CPSIA's language needs to be modified to resemble exemptions granted by the FDA for small producers under the food labeling laws.

Also speaking out against the CPSIA is Kathleen Fasanella, a clothing-company consultant who started the National Bankruptcy Day Web site: "Smaller manufacturers don't have the infrastructure to manage these sophisticated kinds of testing," she told Bloomberg.com, which reports testing is well under way at Wal-Mart, Hasbro, and Mattel.

Earlier this month, the U.S. Consumer Product Safety Commission, which gets to enforce the CPSIA, issued a clarification that at first glance lets off the testing hook sellers of used children’s products, such as thrift and consignment stores, as well as eBay. Yet, they would still be liable if their goods exceed the lead limit.

Fines can be as high as $100K, which is why some resellers are already closing or phasing out children's products, said Adele Meyer, executive director of the National Association of Resale and Thrift Shops, in a conversation with The Arizona Republic. Meyer's group has an online petition to save second-hand stores' from closing.

A few other exceptions have been proposed, which Forbes calls "false hope" and says will do "very little to avert the coming business calamity."

Or, perhaps more accurately, another business calamity.

What are your thoughts? To read where other "concerned people" stand, you may want to check out the CPSIA-Central Ning network.

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