Federal Regulators’ War on Toys Strangles Businesses

Published October 16, 2014

The Consumer Product Safety Commission has proposed new rules governing toy magnet sets, in response to rare incidents involving accidental ingestion of the products.

Almost exclusively marketed to adults, such products contain small magnetic objects intended for use in puzzles, sculpture building sets, and stress relievers.

First spurring the regulatory agency into action in 2012, 100 cases of children eating the magnets were reported to the CPSC between 2009 and 2011. According to data from the U.S. Census Service’s 2010 Profile of General Population and Housing Characteristics, there were 20,201,362 children five years old or less in the United States in that year.

Safe, Illegal, and Rare

With this in mind, magnet ingestion’s incidence rate per population may be calculated, to give an estimate of the risk to the population. Roughly five cases were reported per one million children age five or under.

National healthcare statistics suggest a child in the United States is 2,500 times more likely to visit a hospital to be treated for juvenile diabetes.

And out of the 100 emergency room cases involving these toys, only a single fatality was reported during the three-year period.

In 2012, the CPSC first targeted Buckyballs, a manufacturer of small but powerful magnetic toy balls, for elimination by regulation. Buckyballs, like other similar products, can be attached to one another, forming various shapes. Regulators argued warning individuals the magnets were not intended for consumption was insufficient.

Regulatory Nudge

Although the product was never officially banned from sale in the United States, the commission’s actions convinced most retailers to stop selling the product, by issuing a statement suggesting it was a substantial product hazard, claiming the existence of a serious health risk.

The chief executive officer of Buckyballs, Craig Zucker, fought back by continuing to sell the magnets on the company’s website, until the firm’s dissolution in 2013. CPSC proceeded with an individual prosecution of Zucker.

He eventually reached a settlement with the CPSC, agreeing to enact a voluntary, expensive recall of the products.

In his statement regarding the settlement, Zucker stated his “life has been consumed with defending both an overreaching lawsuit and the rights of small business owners. At this point, I have spent more on legal fees than I will on the settlement.

In his statement, Zucker explained “the law does not support an individual being named in a case like this and I hope that this settlement will discourage the CPSC from wrongfully pursuing individual officers and entrepreneurs again in the future.”

In addition to the disruption of domestic companies’ business activities, the CPSC also closed down the sales activities of companies importing and selling these otherwise legal toys.

Last Gasp

Currently, a single vendor for these imported products remains, as CPSC has effectively killed off or discouraged the remainder of the market.

That company, Zen Magnets, has announced plans to continue defending its right to exist as a business, saying in an August 6 statement on its website the firm “will not settle for any sort of stop-sale of magnets that are perfectly safe when not misused.”

The company’s statement notes CPSC regulators are effectively claiming “the American population cannot be trusted to ever keep magnets out of the mouths of their children.”

The statement, written by company founder Shihan Qu, concludes by vowing to “continue this legal, awareness, and lobbying battle, until our very last drop of cash-flow blood.”

Qu’s statement promises the company will “combat the CPSC’s magnet prohibition until triumph, or until a glorious death of insolvency on the legal battlefield.

“At the very least, we’ll have one more holiday season of availability,” his letter ends.

Matt Hurley ([email protected]) writes from Cincinnati, Ohio.