Daiso Agrees to $2.05 Million Civil Penalty In Connection With CPSC’s Allegations That It Imported, Distributed and Sold Toys With Illegal Lead Content

On March 2, 2010, Daiso Holding USA Inc., Daiso Seattle LLC and Daiso California LLC ("Daiso") reached a consent agreement with the U.S. Consumer Product Safety Commission ("CPSC") filed in the U.S. District Court for the Northern District of California. Daiso allegedly failed to comply with federal laws prohibiting excess levels of lead and phthalates in various toys and children's products. Daiso is also alleged to have failed to meet other federal requirements enforced by the CPSC on children's products. Prior to entering into the current decree, Daiso had received Letters of Advice from the CPSC in connection with violations found during port inspections. Some of these prior violations occurred prior to the enactment of the Consumer Product Safety Improvement Act of 2008 (CPSIA).

Under the CPSIA, it is illegal to import, manufacture, distribute or sell products designed or intended primarily for children 12 and younger containing more than 300 ppm of lead. The CPSIA also prohibits importing, manufacturing, distributing or selling children's toys or child care articles containing more than 0.1% of certain phthalates. Moreover, the CPSIA gave the CPSC additional civil penalty powers.

According to the decree, Daiso will pay a civil penalty of $2.05 million, and is prohibited from importing any children's products into the United States until it meets the other requirements set forth in the consent decree. In addition, Daiso must establish a comprehensive product safety program, including testing, compliance and reporting procedures.

CPSC Chairman Tenenbaum stated that "[t]his landmark agreement for an injunction sets a precedent for any firm attempting to distribute hazardous products to our nation's children.'' She also warned companies against the sale of noncompliant products, stating that, "[w]e are committed to the safety of children's products, and we will use the full force of our enforcement powers to prevent the sale of harmful products."

The size of the penalty and the Chairman's statement are intended to be stern warnings to industry that the CPSC will not hesitate to exercise and take advantage of its increased enforcement powers under the CPSIA. And this action is further evidence of the agency's continued focus on the compliance of children's products with federal safety regulations.