A Dealer Could Be Liable for Up To $15 Million In Fines
But Enforcement Is Another Question
The deadline for retailers to stop selling children’s products that violate lead content limits, set in a new consumer safety law last year, is only one week away.
Unfortunately, many powersports dealers apparently don’t realize that they could be liable for penalties reaching $15 million for violations of the law.
OK, that’s perhaps unlikely. But the Consumer Product Safety Improvement Act (CPSIA) calls for a maximum civil penalty of $100,000 per violation up to a maximum of $15 million for a series of related violations.
And, according to one attorney who is very familiar with the law, there are also criminal penalties of up to five years in jail for a willful violation of the law.
That’s a big OUCH.
Under the law, it’s illegal to sell products designed for kids 12 and younger that contain excessive levels of lead. There are two provisions in the law regarding lead. One applies to lead paint and the second applies to lead content. That means lead in the product itself. In the case of ATVs and dirt bikes and snowmobiles, for example, that can mean steel frames and brakes, etc., etc. The lead content provision is more complicated than the lead paint rule.
As one OEM wrote to its dealers, the law applies to much more than just kid’s quads. Here’s a portion of the OEM’s letter: “… this could mean any inventory that you have on hand that qualifies as children’s products, such as riding gear, sportswear and clothing, licensed toys and merchandise targeted to children, and parts for the snowmobile … and the ATV youth models.” Batteries, valve stems, etc. Need I go further?
The law apparently applies to anything on your floor: current, non-current, used.
So, what’s a dealer to do? As one dealer told me: “What am I supposed to do? Take all that stuff off the floor? I can pull the toys, but what about those bikes that cost me over $3,000?” Good question.
I asked the CPSC that question and others yesterday via email, but they haven’t responded to me.
Dealers aren’t the only ones responsible. Anyone, apparently, who handles the products can be liable. That means manufacturers, distributors and sellers— anyone in the “commercial stream,” as attorneys like to say.
OEMs are scrambling to distance themselves from the problem as much as they can, and I can’t really blame them for that. They’re doing what their legal departments tell them to do; that’s what legal departments are for.
If you’re a dealer, you know that you’ve received notices from your OEM telling you not to sell any products that have not been certified for sale. I’ve seen the letters, and none of them have offered to take back the product. One OEM even said it wasn’t financing any of a list of products after the Feb. 10 deadline.
One dealer told me, the situation reminds him of the three-wheeler problem in the 1980’s, but in that situation OEMs took back the stuff dealers couldn’t sell, he said.
What About Enforcement?
Here’s another thing that I would like to know: Given the fact that we have more than 7,000 franchised dealers, plus another 6,000 or so non-franchised retailers selling parts, garments and accessories, plus a bunch of non-powersports big box and discounters selling machines…. who’s going to enforce this law?
The Consumer Product Safety Commission (CPSC) is understaffed for the amount of work that it’s trying to do. After all, making sure kids are safe is only part of its responsibility. It has to make sure the rest of us are safe, too, from bad products.
It’s unclear, according to my attorney friend, how the CPSC is going to enforce the lead content provision, although the law does say that state attorneys general can take action against violators.
I don’t know how your state government operates, but in Minnesota we have a budget deficit of several billion dollars, and I just can’t see our AG group, with its limited resources, chasing down dealers who sell a kid’s ATV that has “excessive” lead content in the engine block.
It doesn’t seem like too many kids are going to take a bite off that hunk of metal even if they can reach it. Or suck a battery terminal.
So, maybe this is just a big windstorm, and nothing will come of it. Maybe the best thing for dealers to do is simply to stuff those kid’s machines in the back room and wait until the storm blows over.
However, in the meantime, there is something dealers can do. At least one dealer is taking some action and she suggests that you should, too, whether you’re a dealer or a consumer.
Kimberlee Love of West Hills Honda in Pennsylvania has posted two form letters on her website at www.westhills-honda.com. The letters are formatted in templates using Microsoft Word software. One is addressed to a congressman, and the other is directed toward the CPSC.
If you’re interested, just go to Love’s website, download the templates, edit them and enter the name of your congressman, and shoot them off to Washington. She’s even got contact information available with the letters.
At the same time, the MIC (Motorcycle Industry Council) is going the legal route asking for relief. It’s also joining with the National Association of Manufacturers (NAM) in seeking changes.
Thanks, and I’m sure we’ll have more on this subject later this week. JD
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