1. Product Responsibility: A Journey…Not A Destination Anne Lardner-Stone, Director of Public Affairs Promotional Products Association International

2. This information is being furnished for educational and informational purposes only. The Association makes no warranties or representations about specific dates, coverage or application. Consult with appropriate legal counsel about the specific application of the law to your business and products.

3. Agenda Product responsibility – What you need to know – Why you need to know it – How you can get started Case studies Resources 3

4. Increasingly end buyers and government agencies are demanding more from our industry –Social –Environmental –Product responsibility Emerging challenges

5. Compliance with Federal and state regulations is not optional It can be a strategic advantage and increase your value to your customer We are in the brand protection business

6. Product responsibility is everyone’s job Distributors must protect their customer’s brand as if it were their own and do their own due diligence Suppliers must ensure compliance with all regulations and oversee all factories Everyone is responsible for providing safe products that will not cause harm to the end user Education and awareness are critical 6

7. When distributors become suppliers… A distributor who sources direct is a manufacturer A distributor who uses a contract decorator would also be considered a manufacturer 7

8. “All substances are poisons—the difference is in the dose.” Paracelsus (1493-1541), a Swiss alchemist 8

9. 2007: “Year of the recall” 9

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11. 2007: “Year of the recall” 11

12. 2007: “Year of the recall” 12

13. 2007: Big problem with the dose 13

14. 2007: Big problem with the dose 14

15. Mattel’s recall timeline 2007 August 2: Mattel voluntarily recalls 1.5 million Fisher-Price® toys -- high levels of lead. August 14: Mattel voluntarily recalls a further 17.4 million products containing loose magnets easy for children to swallow (Mattel Play Sets and Barbie® Doll & Tanner). September 4: Mattel recalls another 850,000 toys due to lead paint contamination (Barbie® Accessory Sets, It's a Big Big World™ and GeoTrax™ Engines). October 25: Mattel voluntary recalls Go Diego Go!™ Rescue Boats coated in paint containing hazardous levels of lead. November 6: Mattel voluntarily recalls 155,000 Laugh & Learn™ and Learning Kitchen™ toys due to a choking hazard.

16. Congressional response In 2008, Congress passed the Consumer Product Safety Improvement Act (CPSIA)

17. Recalls are down… 172 toy recalls in fiscal year 2008 50 toy recalls in FY 2009 46 toy recalls in FY 2010 34 toy recalls in FY 2011 38 toy recalls in FY 2012 31 toy recalls in FY 2013

18. Port stoppages are up… CPSC using risk assessment methodology (RAM) pilot targeting system to analyze CBP data and identify high- risk shipments of consumer products arriving at U.S. ports of entry, and then make calculated and effective decisions about which shipments to inspect Over 6 Million units of violative or defective products stopped during Q1 and Q2 of FY 2013 » 87% were children’s products » Lead – 335 (paint 46; content 289) (57%)

19. CPSIA focus Defines a child as 12 and younger Applies to: – Children’s products – Childcare articles – Children’s toys

20. CPSIA requirements Third party testing mandatory: – Lead in substrate – Lead in paint and surface coatings – Some phthalates Children’s Product Certificate mandatory Tracking labels mandatory Makes previously voluntary standards mandatory

21. Lead in substrate Substrate is the material of which something is made, and to which surface coating (i.e. paint) may be applied – 100 ppm lead as of August 14, 2011

22. Lead Paint Rule Decorated or scrapable surface coatings 16 CFR 1303 in effect since 1978 at 600 ppm As of August 14, 2009, sets limit at 90 ppm

23. Phthalates Applies only to children’s toys and child care products For all such products, DEHP, DBP, BBP – limit of 0.1% For all such products or any part of the product that can be placed in a child’s mouth: DINP, DIDP, DnOP – limit of 0.1% (interim prohibition) Applies to accessible materials only (before and after use and abuse testing)

24. Ban on small parts Ban on small parts for products intended for children under 3; warning for products intended for children between 3 and 8

25. Children’s Product Certificate (CPC) Importer or Domestic manufacturer is responsible for testing and certification All testing must be reflected in Children’s Product Certificate (CPC) or General Conformity Certificate (GCC) Must be produced and made available for every youth order Sample certificates on the CPSC website

26. Children’s Product Certificate (CPC)

27. Tracking Labels Required for all children’s products manufactured after August 14, 2009 Enhance recall effectiveness Required information: – Manufacturer name – Month & year of manufacture – City & state of manufacture – Batch or internal order number – Distributor PO number

28. Tracking Labels Must be permanent – Hangtags and adhesive labels not acceptable Supplier should include tracking label information Depending on changes made to the supplier’s product, distributor may need to include additional tracking label markings

29. Tracking Labels Example using the PPAI tracking label system: ps.ppa.org/SAMPLE003 Promotional Products Association International

30. And more… Federal regulations: – FDA (particularly drinkware, sunscreen) – Dodd Frank Act – Lacy Act State regulations – Prop 65 – Cadmium – Packaging – Lead International standards And more…

31. What worries me? A juvenile imprint can transform a “general use item” into a “children’s product” Discovering the intended audience can be difficult Far too often, test reports are out of date, based on wrong standards, incomplete or for a different product Distribution site often unknown to the manufacturer

32. How do you determine if something is a children’s product?

43. Marketing statements

46. Product responsibility 46

47. Product responsibility 47

52. 52

53. 53 Most pens are general use Think before you include a picture of a child interacting with the item on your website or in your advertising Look for tracking labels—no one size fits all solution Test reports should include pictures If it is a children’s product, ask for the CPC No drawstrings! Ask your screenprinter for ink test reports Look for the secondary tracking label Even if the item is a general use item, there may be regulations beyond CPSIA

54. Undue Influence Training Anne Lardner-Stone, PPAI Director of Public Affairs

55. This information is being furnished by PPAI for educational and informational purposes only. The Association makes no warranties or representations about specific dates, coverage or application. Consult with appropriate legal counsel about the specific application of the law to your business and products.

56. New CPSIA requirements effective February 8, 2013 Testing and Labeling Pertaining to Product Certification – 16 CFR 1107 – Certification of Children’s Products 1107.20 1107.21 – Periodic Testing 1107.23 – Material Change 1107.24 – Undue Influence 1107.26 – Recordkeeping 1107-30 – Consumer Product Labeling Program

57. Purpose Establish protocols and standards for ensuring continued testing of children’s products Material change requirements Safeguards against exercise of undue influence Establish program for labeling of consumer products

58. What is undue influence training? Undue influence training is training to ensure that manufacturers and their employees do not exert undue influence on testing laboratories to alter test methods or test results that serve as the basis for certifying a product’s compliance under federal law.

59. If you interact with a third-party testing lab, what must you do? Establish procedures to safeguard against the exercise of undue influence by the manufacturer on a third-party laboratory – Written policy – Training and retraining – CPSC notification of any attempt to hide or exert undue influence over test results – Staff assurances

60. Written policy Develop a written policy statement from company officials that the exercise of undue influence is not acceptable

61. Written policy This policy should not only satisfy the rule, but also accentuate to staff its importance to the company Make the written undue influence policy visible and available to customers and the public Consider including the policy in the company code of conduct

62. Sample written policy

64. Training All employees who interact with testing labs must undergo training to ensure that no one engages in actions or makes statements that will be considered undue influence. If the undue influence policy changes, all employees must be retrained.

65. Training All employees who are trained are required to sign a statement attesting to their training attendance.

66. Requirements A digital signature or other electronic attestation (such as a check box), indicating that an employee took the training as part of software or online training, would meet the requirement to “sign a statement attesting to participation in such training.”

67. Training courses CPSC does not provide a model undue influence training course.

68. Undue influence training Testing and certification of children’s products are important parts of the process of compliance. By law, you must not apply undue influence on third party conformity assessment bodies to product favorable testing results

69. What is undue influence? The CPSIA law does not provide a definition of undue influence.

70. What is undue influence? Mental, moral, or physical domination (even if natural or right) that deprives a person of independent judgment and substitutes another person’s objectives in place of his or her own. Exercise of undue influence is characterized often by excessive insistence, superiority of physical power, mind, or will, or pressure applied due to authority, position, or relationship in relation to the strength of the person submitting to it. Consent obtained for a contract, relationship, or transaction is voidable if it can be shown that an unfair advantage has been taken of an involved party. In dealings between parent and child, husband and wife, attorney and client, or doctor and patient, undue influence is generally presumed to have been exercised unless proven otherwise. See also coercion and duress. Read more: http://www.businessdictionary.com/definition/undue- influence.html#ixzz2LIekFtP7http://www.businessdictionary.com/definition/undue- influence.html#ixzz2LIekFtP7

71. Undue influence Undue influence occurs when one party uses his/her position to influence the other party to gain some advantage Pressure is typically exerted through persuasion rather than coercion

72. Undue influence Undue influence may result in undermining the integrity of testing data that can result in defective products that may injure or kill consumers, bring liability to the company and cause loss of business.

73. Best practices to avoid unduly influencing a third party lab Ensure you follow appropriate sample selection protocols Do not test “golden samples” Don’t threaten to change third party testing providers because of an unsatisfactory test report Avoid developing personal relationships with the lab that could somehow influence test results

74. Obligation to exercise due care Applies to each domestic manufacturer or importer of a children’s product. The importer is not required to train employees of foreign manufacturers, but must be sure to exercise due care.

75. Obligation to exercise due care Train your factories in your policy and advise them that their acts of undue influence on labs may cause you to rely on their supplied test reports for CPCs that can be deemed invalid by the CPSC and bring liability to you as the “certifier” for failing to exercise due care in preventing undue influence in your supply chain

76. Reporting If you witness or are aware of what you believe is in incident of undue influence, it is your responsibility to report it Ideally, you should report it to your immediate supervisor. If you are not comfortable doing so, you may report it to any company officer. The CPSC must be notified immediately of any attempt by the manufacturer to hide or exert undue influence over test results

77. Undue influence For our purposes, any action or statement that undermines the credibility and validity of the testing process used for the certification of children’s products is undue influence If you have any doubt, report it

78. Staff assurances Manufacturers must inform their employees that allegations of undue influence may be reported confidentially to the CPSC, and manufacturers must tell their employees how to make such confidential reports Reports alleging undue influence should be filed with the CPSC Office of the Secretary

79. Reporting You may report incidents of undue influence confidentially directly to the CPSC: U.S. Consumer Product Safety Commission 4330 East West Highway Bethesda, MD 20814 301.504.7923 or 800.638.2772 www.cpsc.gov

80. When undue influence occurs Employees who have engaged in undue influence should be disciplined in accordance with the company’s policy for employee disciplinary actions Discipline may range from a written or verbal warning up and including termination of employment

81. When undue influence occurs The company should take appropriate actions to correct the situation, including retesting of the products and retraining the employees The company must promptly report all undue influence incidents to the CPSC.

82. New CPSIA requirements effective 2.8.2013 Testing and Labeling Pertaining to Product Certification – 16 CFR 1107 – Certification of Children’s Products 1107.20 1107.21 – Periodic Testing 1107.23 – Material Change 1107.24 – Undue Influence 1107.26 – Recordkeeping 1107-30 – Consumer Product Labeling Program

83. Periodic testing Manufacturers must develop a Periodic Testing Plan to ensure continued compliance that includes: – Tests to be conducted – Intervals at which the tests will be conducted – Number of samples tested At minimum, periodic testing should be performed annually

84. Material change A material change includes changes in: – Product design – Manufacturing process – Sourcing of component parts – Tooling – Changes in manufacturing facility New certification testing will be required on the “new product”

85. Recordkeeping Children’s Product Certificate (CPC) for each product Records of each third party certification test Records of period tests Records of descriptions of all material changes Records of undue influence procedures—including training materials and training records of all employees These records must be kept for 5 years and may be maintained in languages other than English if they can be immediately provided to the CPSC and translated into English within 24 hours of a request by the CPSC

86. Consumer product labeling program MEETS CPSC SAFETY REQUIREMENTS – Label must be visible and legible – Product must comply with all applicable rules, bans, standards and regulations enforced by the CPSC – Additional labels may be added - Verbiage must not imply that the CPSC has tested, approved, or endorsed the product

87. Product safety resources PPAI: www.ppai.org Product Safety powered by PPAI: http://www.ppai.org/productsafety Sample Undue Influence Statement of Policy http://www.ppai.org/inside-ppai/product-safety/product- guides http://www.ppai.org/inside-ppai/product-safety/product- guides Consumer Product Safety Commission: www.cpsc.gov ; www.recalls.gov Questions? Anne Lardner-Stone AnneL@ppai.orgAnneL@ppai.org Tim Brown TimB@ppai.orgTimB@ppai.org