$1.3 Million Settlement in Toxic Toy Case

The U.S. Consumer Product Safety Commission's provisional settlement of a case that began in 2007 shows again that selling a dangerous product can be heavily punished.

The U.S. Consumer Product Safety Commission has provisionally accepted a settlement with Spin Master, Inc. and Spin Master, Ltd., that includes a civil penalty of $1.3 million. The case involves about 750,000 units of Aqua Dots, described as "children's arts and crafts toys that consisted of tiny beads of different colors that stuck together when sprayed with water, allowing children to create various shapes and designs," which Spin Master, Inc., based in Los Angeles, imported in 2007 and sold to U.S. consumers and retailers.

Spin Master soon received reports that children and a dog had become ill and received emergency medical treatment after ingesting Aqua Dots, but the company did not report that to the commission, according to the notice, which says Spin Master learned on Oct. 18, 2007, that Aqua Dots contained 1,4-butylene glycol -- a chemical that, upon ingestion, metabolizes to gamma hydroxybutyrate, which is a Schedule I controlled substance. A day later, Spin Master "received information that TMG is harmful if swallowed, and that, upon ingestion, it targets the kidneys and central nervous system," the notice states.

It says Spin Master continued to receive reports of children falling ill after ingesting Aqua Dots and also received reports of children falling ill after ingesting a similar product manufactured by the same overseas factory using the same ingredients list containing the chemical.

The notice says commission staff contacted the company on Nov. 5, 2007, and notified it of an ingestion incident that had occurred in October 2007; Spin Master, in cooperation with the commission, voluntarily recalled the product on Nov. 7 and issued a press release announcing that "[c]hildren who swallow the beads can become comatose, develop respiratory depression, or have seizures."

"While the firm had enlisted an outside testing agency to evaluate the toxicity of the product, the testing was inadequate. Notwithstanding the testing results, the incident data reflective of human experience suggested that the product was toxic," the notice states.

CPSC's notice says Spin Master Inc. is a wholly-owned subsidiary of Spin Master US Holdings, Inc., which is a wholly-owned subsidiary of Spin Master Ltd., which is located in Toronto, Canada. Spin Master denies that it knowingly violated the law, denies any liability, and says as the product's distributor, it was not involved in the design, invention, or manufacture of Aqua Dots, according to the notice. Spin Master claims it ensured the product underwent all legally required testing under FHSA regulations, CPSC lead content requirements, Canadian Hazardous Products regulations, and ASTM labeling standards before distribution of the product began, and the product passed all such testing. The distributor, Spin Master, Inc., began distributing the product in the United States in April 2007 and sold approximately 1,335,151 units, according to the company.

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