The rise of the cowboy toy importer: Do New Zealand's regulatory standards need a revamp?

Variation of knowledge around children's toy standards in concerning, Commerce Commission says. Photo / 123RF

Unsafe toys are being sold through discount stores, weekend market stalls and cowboy online sellers, putting young children at risk, says the head of New Zealand's largest toy distributor.

And children's toy safety standards need to be better known and enforced industry-wide, warns New Zealand's consumer watchdog.

This year alone, the Commerce Commission has prosecuted two toy importers for distributing products that do not meet New Zealand safety legislation.

East Tamaki toy importer AHL Co was fined $20,000 in February for selling a baby rattle which did not comply with mandatory standards required under the Fair Trading Act.

Mega Import was fined $65,000 for selling a baby buggy set and a rattle which did not comply with the mandatory standard.

While the vast majority of toys sold in New Zealand are safe, those inside the industry say an increasing number of unsafe toys are entering the market through "secondary sellers".

Commissioner Anna Rawlings says recent prosecutions should act as a warning to those who do not comply with mandatory toy safety regulations.

Under the Fair Trading Act, toys designed or labelled for those three years of age or under must be mechanically and physically manufactured to certain standards to ensure small parts do not come loose and become a choking hazard.

It is an offence to supply, or advertise to supply, toys intended for use by children in this age group if they don't comply with those parts of the standards that are mandatory by law.

ACC received more than 60 claims for children aged three or under who were injured by swallowing small toys or parts of a toy last year, and 890 claims over the last five years.

The 123 Mart — now in liquidation, which operated 18 retail stores, was last year fined more than $337,000 for selling approximately 9000 units of seven different types of toys with small hazardous parts.

Rawlings says the commission often receives complaints about certain toys and investigates but has recently taken a proactive approach to enforcing standards.

"Within the last couple of years we've done a number of [unplanned] product inspections among retailers," she says.

Commission investigators have so far conducted about 100 inspections in the year ending June.

But Jeremy Kirk-Smith, chief executive of New Zealand's largest toy distributor Planet Fun, says the regulatory body is not doing enough.

Kirk-Smith says the commission should focus on investigating toys sold at local markets or in "lesser retailers" not "reputed retailers".

"I feel very strongly about toy standards and the enforcement of them, and it's a great concern that there's a lot of people who don't care about them," he says.

"There are some really good standards, but in New Zealand they are enforced voluntarily which means that, for instance, every time we get product we make sure we've got all of our test certificates and that we keep them on file." But nobody checks testing certificates "until something goes wrong", he says.

"I think the Commerce Commission more often than not are looking in the wrong places. They're very hard on reputable retailers, whether it be Farmers or The Warehouse or Kmart, and us — which is all good ... but they're not pushing the other people who don't care and are never checked, such as cowboys on Trade Me."

The vast majority of large New Zealand retailers subscribe to an ethical toy standards programme, such as that of the International Council of Toy Industries (ICTI), and some have their own internal standards.

The Warehouse Group says it has a framework and systems in place to ensure the toys it sells go through the correct quality assurance and control processes.

"This includes a record of compliance guides for each category to ensure products meet our own high standards, as well as a product standards library providing access to full regulatory standards," says Jenny Epke, general manager of merchandise at the Warehouse.

"Before any new toy product arrives on our shelves, we require an independent third-party-accredited laboratory report that tests the toy against the relevant standard."

Department store Farmers also has an in-house quality ensurance team and online retailer Mighty Ape has dedicated department managers that specialise in compliance standards around baby toys.

Mighty Ape says it only works with reputable local distributors and does not import baby toys from other markets.

Rawlings say it is the responsibility of retailers, manufacturers, suppliers and distributors to ensure the toys they deal with are up to mandatory standards.

"There are a large number of compliant toys on the market but there's also a concerning number of retailers who are unaware of their toy safety obligations," she says.

"We primarily identify the toys by visiting retailers but often go back to the importer or distributors to speak to them about product safety compliance." Generally, safety testing checks on a product can take up to 10 days.

"The level of compliance and compliance programmes in place in theory is great with retailers. But we find some just have no understanding of their legal obligations, whatsoever, and that was commented on in recent cases we've brought where the Court has commented on the lack of compliance programmes."

Larger retailers are generally good at ensuring such standards with products they sell but the variation in knowledge on the topic is a concern, Rawlings says.

"It is concerning and we want to lift compliance by educating retailers about their responsibilities to make sure everybody is reaching the same standard."

University of Auckland commercial law lecturer Dawn Duncan says children's toy standards are not easy to understand, and expensive to follow.

"I think the problem is not so much what's in the standards, or the technical component of the standard, it's the fact that people aren't accessing them and ensuring that the products actually comply with them," Duncan says.

"There's a lot of standards produced by Standards New Zealand and some of them are called sponsored standards which means the Government pays for that information to be made freely available to people in the market, but the toy standards aren't.

"Each standard tends to cost [about] $200 each so for somebody running a toy shop or importing they might need more than a dozen, they change often, and they are subject to copyright so you can't distribute them, so I think there are questions around how easy is it for people to access that information and comply with it."

Duncan says she is unsure whether the current model of regulatory settings are best-suited for the market.

"Do we have the right regulatory settings for the market as it exists now? Is the regulator doing enough on the front end to help people know what it is to be compliant? Is there enough free, easy-accessible information for people in the business?"

Counterfeit toys positioned as the real deal is also a problem in the toy industry, Kirk-Smith says.

He believes Customs should regulate imports coming into the country.

"I think Customs should be checking licences, they should be checking testing certificates, even on a random basis, but they don't do any of that," he says.

In a statement to the Herald Customs said it did not conduct random inspections on toys at the border as enforcing safety standards is the responsibility of the Commerce Commission.

"Customs does not randomly inspect children's toys at the border to ensure they meet safety standards and have the correct documentation, but we do seize toys and other counterfeit goods that come to our attention," the statement reads.

"It is impractical for Customs to stop each and every toy import — this would increase the costs for the overwhelming majority of toy importers who take their compliance obligations seriously."

Kirk-Smith says he believes auction site Trade Me should better ensure the toy safety standards of the products listed on its website.

"[The listings] tend to be [from] these one-off cowboy importers," he says.

"That's where the problem comes in ... and they are selling some pretty big volumes."

Trade Me told the Herald all of its members had to comply with New Zealand law and therefore could only sell items that can legally be sold.

"If we have concerns about a certain item, our Trust & Safety team will request a proof of product safety document from the seller. If this is not satisfactory we will remove the item from the site."

Kiwi toy company works hard to meet safety rules

Zuru co-founder Nick Mowbray.

New Zealand toy maker Zuru, which has more than 5000 employees and 15 offices worldwide, ships its products to more than 20 countries.

Zuru co-founder Nick Mowbray says toy safety regulations are always front of mind, particularly when creating new toys.

"We're always having to change design or engineering aspects in order to meet the testing requirements — it's a pretty hand-in-hand process when we're developing something," Mowbray says of the company, whose toys are made in China.

Zuru has more than 40 people in its toy safety testing team.

"When it comes to testing, there's lots of industry regulations which you have to comply with — there are multiple testing layers."

One toy it is working on is going through testing and development.

"One of our new brands that we're launching, it has sequins on it and apparently if you add sequins combined with plush, there's regulation around sequins being on plush because plush has to be three-ply so we're not actually allowed to put sequins directly on the plush, and so we have to redesign the whole product line around that regulation so we'll work with testing labs and then internally on solutions and work out how to make it work within the regulations."