A $600,000 difference of opinion

A dispute between Target and the Consumer Product Safety Commission over recalled toys containing lead paint has resulted in a $600,000 fine, but the true cost is harder to gauge due to the timing of negative publicity related to the fine and the inference of guilt associated with payment. The news release announcing the fine was distributed last week and was widely reported on just days before a major ad for holiday toys appeared in this past weekend’s circular.

According to the CSPC, from 2006 through 2008, Target knowingly imported and sold various toys with paint, or other surfaces coatings that contained lead levels, that exceeded a federal restriction that says lead cannot exceed 0.06% of the weight of the total nonvolatile content of the paint or weight of the dried paint film. CPSC staff alleged that Target failed to take adequate action to ensure that no toys or children’s products would bear lead-containing paint, thereby creating a risk of lead poisoning and adverse health effects to children.

Target disagreed, and although its reasons why were laid out in a settlement agreement, they were not widely reported. The company contends it did take action. In fact, “at all times relevant to this matter, Target’s quality assurance procedures were reasonable and satisfied the standard of care.”

The irony of the situation is that preproduction testing failed to reveal inappropriate lead levels, but upon discovery later, Target called the issue to the CPSC’s attention and initiated the recall. The safety of children is not a trivial issue, but this situation appears to be one where the CPSC wanted to make an example of a high-profile company.

“These highly publicized toy recalls were among many that helped spur action last year to impose even stricter limits on lead paint on toys,” said CPSC chairman Inez Tenenbaum. “This penalty should remind importers and retailers that they have always had the same obligation to meet the strict lead limits as the manufacturers.”

Such tough talk makes the last line of the settlement agreement all the more noteworthy. “The agreement does not constitute an admission by Target, or a determination by the Commission, that Target has knowingly violated the CPSA.”