Sunday, March 14, 2010

CSPIA - Treatment of Resale Goods under the Waxman Amendment

The new Waxman Amendment provides an arcane and inadequate resolution of the longstanding complaints about the treatment of resale shops and resale goods under the CPSIA. The amendment adds a new provision, Section 101(b)(3), to address the resale issues.

This short provision has a lot going on:

a. It only applies to lead restrictions. The exceptions for resale goods do NOT apply to the phthalates ban. This means that used toys are unlikely to reappear in resale shops. It also means that anything possibly affected by the phthalates ban, including certain clothing and childcare articles, will be dangerous to sell in resale shops.

The legal niceties are of little import here - these low revenue stores won't go near trouble. Will they know what's okay to sell and what's not? Probably not. Of course, the CPSC could always put out a new guidance brochure for them - something to look forward to!

Arguably, the inability of the Dems to give a clean waiver to the resale industry means that the resale exemption grants little relief in practical effect. That's my belief, at least. If resale shops do not feel comfortable that the responsible administration of their businesses will keep them out of harm's way (including being free of the possibility of bad publicity), they are likely to stay out of the market for children's goods entirely. Resale stores don't have legal departments . . . . [Who knew?!]

b. The definition of a "used children's product" is quite interesting:

"The term ‘used children’s product’ means a children’s product that was obtained by the seller for use and not for the purpose of resale or was obtained by the seller from a person who obtained such children’s product for use and not for the purpose of resale."

This obtuse language is intended to forbid the bulk resale of merchandise by inventory liquidators while permitting charity or consignment sales of children's product. "For profit" resale shops will also be snagged on this language.

The origins of this language is presumably Commissioner Bob Adler's odd Solomonic recommendation that charity shops be allowed to sell used clothing but not "for profit" resale shops.

The new definition is confusing because of the peculiar word "obtain". There is no question that under this provision, you cannot "obtain" children's products for the purpose of resale. Does this restriction apply to donated goods? Probably not because the legislators presumably believe you don't "obtain" a donation for a particular purpose. Of course, that's a fiction - do you think the Salvation Army accepts donations of children's products with no purpose in mind? Could this language be a backhanded way to approve the distribution of donated goods for free but not for a nominal price? Possibly.

Would this limitation apply to consignment sellers who never take title - do they actually "obtain" the goods? Consignment sales may be okay but no doubt some factual inquiry will be required, a nice case-by-case analytical process to keep the CPSC busy! Ebay resellers and "for profit" resale shops are almost certainly not given relief by this language. The Resale Roundup is not in danger . . . .

The asserted distinction between a reseller of donated goods (a so-called charity shop), a consignment store and a "for profit" resale shop is flimsy and patronizing, in my view, reflecting a patrician view of society and the needs of the "lower class". As I have explained in the past, the issue should be about safety, not compassion for the impoverished. Is it morally permissible to give dangerous products to children because they are poor? Please, don't insult my intelligence. If the goods are safe, sell them - and if they're not, throw them away. It has nothing to do with "needy" kids. This is yet another case of Dem legislators being unwilling to take a reasonable stand on what is and what is NOT safe. They are apparently willing to sacrifice the resale industry to their lack of courage.

c. As if the foregoing didn't prove that the bill's authors live in La La Land, the definition of "used children's product" has several exceptions, namely children's metal jewelry, painted children's toys, children's products comprised "primarily" of vinyl and any other children's product later identified for this list by the Commission. I guess the charity shops are supposed to keep their eyes peeled.

So apparently the idea is that resale shops can get back into the children's product business except . . . except . . . except . . . . The simple relief these shops need has been denied in favor of new uber complexity. To the intended beneficiaries of this "relief", complexity alone will make the law unintelligible or at least unmanageable. Despite the "good intentions", the effect of the relief will be moot - in other words, nada.

You should be OUTRAGED about this situation. The very FACT that this Dem-controlled Congress has been sucking its thumb over this issue for TWO YEARS, through two cold and snowy winters, is a national embarrassment. Frankly, it more shameful than that. When the Dems finally worked themselves into action, this is the best they could do?

The persistent inability of the Dem Congress to act sensibly on this issue is both demoralizing and illuminating. This situation is the Dems' handiwork and yet, the disruption of this market affects the neediest Americans, and among them, the youngest and most vulnerable. Quite a departure from Democratic Party traditions. Not only is access to kids' warm winter clothing impacted, but so many other important products are embargoed, from baby items to educational products to whathaveyou. And even though the needed goods are plentiful, the CPSIA made it prohibitive to offer them for sale at a low price. Too bad, Poor People!

The poor don't deserve to live in the anti-economy just because the Dems have a phobia. The fact that the Dems can't apparently empathize with people who really need their support is so shocking.

I hope you won't support this bill regardless of its impact on you unless it gives real relief to those in need. If we are really a community, we must DEMAND true relief for the resale market. It's time to take a stand against a stubborn, morally-numb, self-justifying Dem Congress.


Paul said...

I am a simple and naïve American, and I know that well. I actually expect and still believe our government would lead our Nation properly. So, if Mr. Waxman has time, I'd loved to have him help me out with, and correct me if I've misunderstood, the amendment.

On one hand, lead on the child clothing's zippers and button are so harmful that we need to ban it completely to save our kids. On the other hand, it's ok to have 2nd hand clothing resale done on it??... ...

Okai, so, here is my confusion. Does Mr. Waxman really care about our kids or his caring is with his vote? Now, at the same time, I understand Mr. Waxman could honestly care about both, if and only if, he knows well that the zipper and button could never really reasonably harm our children. If that's the case or in any case, my question would be then, as a leader of our Nation, does Mr. Waxman and his boys and girls care anything about facts, just, integrity or possibly the ever-real difficulty of their fellow countrymen?

Or Mr. Waxman is simply trying so hard to reignite our voting passion for "Government of the people, by the people, and for the people"?

Mr. Waxman is deep for this simple and naïve man.

Anonymous said...

Again, Rick, my thanks to you for taking on this thankless and daunting task. I think you should run for the next Seat in Congress! ;-)

jennifer said...

i agree with anonymous, we need someone like Rick in office - someone who has diversified experience - I am done with these career politicians!

thank you for all of your work on this.