Daiso to pay $2 million fine, stop selling kids products after breaking federal laws

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Daiso penalized $2 millionDaiso, a huge Japanese-owned retail chain with some 3,000 stores worldwide,has been accused of repeatedly violating federal safety laws while importing toys and other children's goods from China and Vietnam. The company has agreed to pay a $2 million penalty and, in an extraordinary move, was forbidden from future commerce of children's products until the company can demonstrate it can comply with U.S. laws.

The U.S. Consumer Product Safety Commission announced the action against Daiso Holding USA Inc., Daiso Seattle LLC, of Seattle, Wash. and Daiso California LLC, of Hayward, Calif. today. The company was accused of violating laws governing the import and sale of toys with high levels of lead, lead paint and phthalates, as well as having toy parts too small for products meant for children younger than three years old, and for failing to have required warning labels.
"This landmark agreement for an injunction sets a precedent for any firm attempting to distribute hazardous products to our nation's children" CPSC Chairman Inez Tenenbaum said in a written statement. "We are committed to the safety of children's products and we will use the full force of our enforcement powers to prevent the sale of harmful products."

In order to resume selling children's products in the U.S., Daiso must hire an independent product safety coordinator to develop a product safety program, undergo a merchandise audit and ensure the company has proper procedures in place to comply with U.S. safety laws.

Daiso, which runs nine stores on the West Coast, already has agreed to withdraw all toys and children's products from the market. The company is best known for running "100 Yen stores" -- more familiarly known as dollar stores. Daiso has had U.S. operations since 2005.

The company has been subject to several recalls ranging from pull toys to purses to stuffed animals after flunking inspections of its merchandise by CPSC staff. A complaint lodged in U.S. District Court in San Francisco details how the company has been warned since 2006 and was found over and over again to have brought in children's products that violated federal law.

In 2002, several companies faced a similar action with far smaller penalties (the maximum fine has since been raised considerably.)

In agreeing to the penalty and restrictions, Daiso admitted no wrongdoing.

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