Good morning everyone. Thank you. My name is Carol Cave. I'm the deputy director in the Office of Compliance and Field Operations. I wanted to thank everyone for coming today both in live and webcast. We have an extensive agenda planned for today, and we hope that it will answer many of your questions and provide opportunities for you to interact with the staff and industry and hopefully get a lot of the questions that have been coming in answered. We will be looking at, you know, regulation requirements, testing requirements. There will be open Q&A forums, which I think will be incredibly valuable to all of you. And then we will be providing as a follow-up to the webinar and the live training today some follow-up Q&As that will be posted online for all of you to have access to and visibility to. We also hope that after today you'll actually get back to the staff and give us your feedback on whether you found this session actually beneficial or not. We've been looking to do many more of these and not many, many, many more, but as many as we can and resources allow. It is a very resource-intensive thing for the staff and they have put an incredible amount of time into this. I do want to thank the staff, Mary Torres specifically, and the technical team and the legal team and the Small Business on Budsman office. They have put extensive resources into this effort and we hope that we cover every possible question that you could have. With that, I'm actually going to turn that over to Mary Toro. She is the master of ceremonies today for this effort, and I hope that you all enjoy the session today. Thanks for coming. Thanks, Carol, and welcome everybody to the seminar. So before we begin this morning, I want to make sure that everybody received a folder, a CPSC folder with the agenda in it and information about the wireless. The where the restrooms are, they're outside. You can leave at any time when you need to, outside across from the security guard. We have lunch information in the bind, in the folder. The lunch is on your own. The government's not paying for it. So we expect you to come back after an hour and 15 minutes. We'd like you to return promptly because we want to get the afternoon session started. As you can see from the agenda, we do have a lot of stuff planned and we want to make sure that everybody has enough time to ask questions. We request that no food or drink be brought into the hearing room other than water, and we request that you respect that request. We've not conducted a full-day sleepwear seminar in many years. The CPSIA, the Consumer Product Safety Improvement Act, added a lot of new requirements to children's products. Even though the requirements have been in place for eight years, we still get a lot of questions about the requirements and we see a lot of violations for products that we're monitoring. My hope is that you leave the seminar today with some new information, a better understanding of the requirements for children's sleepwear and children's products, and what you need to do to manufacture and import compliant product. It's not just about understanding the performance requirements. It's really about understanding what you need to do to market product that's compliant. The flammability standards have been in place for many years, I think, about 44. I look across the crowd here and a lot of you probably weren't even born when the regulations went into effect. But they're good regulations, they're a good standard, they're still effective, they keep kids safe, and they keep kids from getting into having burn injuries. So new entrants to the market continually have to be educated on what those requirements are, and that's why we're doing this seminar. To get that information out to people so that they know how the rules are implemented and how we enforce the standards and continue to save lives and reduce injuries from sleepwear clothing fires. Your focus on the items that we discussed today will have a positive impact on moving forward. I want to thank all the panelists for taking time out of their busy schedules to come here and provide information to everyone. And I also want to thank everyone that helped put the seminar together, just in case I forget to do it at the end of the day. Not sure how awake I'll be. So if at any time during the presentations you have questions, we will be scrolling across the screen. Email address, it's Jay Kent at CPSC.gov. And we'll be pulling the questions and trying to provide answers during the seminar. Anything that we don't answer, we will put together at the end of the session some type of a fact sheet or something to provide to people. And the slides for the presentation will be available on our website at some point after the presentation is completed. So I'm going to begin this morning's session talking about general regulatory requirements. I am not going to get into the sleepwear standard, although I'll try to relate the current requirements to the sleepwear standard. My presentation is basically on an overview of what all those requirements are. And I'll talk a little bit about CPSC just for those people that don't know what we are and how we're set up. We're a small federal independent agency.  They are appointed by the president and confirmed by Congress. The chairman is appointed by the president. So it's a bipartisan group. Whichever party is in power at the time, the chairman is affiliated with that party. So today, CPSC has authority under many acts. I think we have about nine or ten now. There's the seven main acts, but there's also the drywall labeling act. And the liquid nicotine children's poison prevention packaging act. But we're not going to talk about those today. Today we're just going to talk about the Consumer Product Safety Act, the Federal Hazardous Substances Act, and the Flammable Fabrics Act. And that's because these are the acts that are specifically associated with children's products that we're talking about today. The Consumer Product Safety Act has the safety standards for children, safety standards. The Federal Hazardous Substances Act has requirements. And then the Flammable Fabrics Act has the Flammability Regulations or standards for apparel and other interior furnishings. So the CPSA was enacted in 1972 and it gave us the authority for, it defines our basic authority and it established the Consumer Product Safety Commission. So we call the Consumer Product Safety Act kind of our umbrella act because it has some of the main features for regulating consumer products. It authorizes the Consumer Product Safety Commission to develop standards and bans and it gives CPSC the authority to pursue recalls and to ban products under certain circumstances. The Consumer Product Safety Improvement Act was one of the main amendments to the Consumer Product Safety Act. It also amended the other statutes under our authority and kind of tried to, what I would like to say, try to normalize the different provisions under the different statutes. It established new rules for many products. It established new rules for children's products. It added definitions for what is a children's product and how do you determine a children's product. And it imposed new mandatory requirements both for general purpose products, what we call general purpose products, and for consumer products by requiring certification of those products. Originally under the Consumer Product Safety Act all products that were regulated under that act required certification of some means and usually those certification requirements were written into the regulation. But the Consumer Product Safety Act, Improvement Act added a requirement for a paper certification so that companies had to actually test their product and issue a certificate stating that that product met the requirements of the regulation based on testing that was done for that product. So it put another, an added responsibility on the manufacturers for ensuring that those products were compliant before they came on the market. Many of the requirements instituted by the Consumer Product Safety Improvement Act were for specifically for children's products. And as I said, it added a definition to the Consumer Product Safety Act for children's products. Prior to the CPSIA there was no defined definition under any of our acts for what is a children's product. So the CPSA added that and said that a children's product was a product that was manufactured or designed or primarily intended for children 12 years or younger. And it also added a provision actually for phthalates which added a requirement for childcare articles specifically for childcare articles. And it defined childcare articles as items used to facilitate sleeping and feeding for children three years or younger. I mean there's more to that definition but the reason I pulled that out is because it's important for sleepwear because children's sleepwear is considered a childcare article because it does provide, it does facilitate sleeping. So items that are on a sleepwear garment that are plasticized or have plasticized components like the little stopper feet, the little stopper pads that are on the bottom of vinyl feet on a children's sleepwear is subject to that requirement for phthalates. In addition you'll see later too the vinyl feet are subject to the lead requirements that were also added under the Consumer Product Safety Improvement Act. But I'm getting ahead of myself. I have some slides on what some of the key chemical requirements of the CPSIA are. One is lead content requirements, reduced the requirements for lead and surface coatings. It added a requirement for phthalates which prior to the CPSIA we had no limits or special requirements for phthalates. And it also added key procedural requirements which means that we had some things we needed to do now that we didn't have to do before, or manufacturers had to do some things that they didn't have to do before. They had to have their children's product tested by a CPSC accepted and accredited laboratory. Meaning that you have to look on our website to see who is accredited and who is certified. And you have to make sure that the lab is certified and accredited for the testing that you want to have that lab do. It also requires certification and it requires that all children's products have tracking labels. The total, the lead requirements are for lead content which means that the substrate that the product is made out of cannot contain more than 100 parts per million lead. It also requires, it reduced the requirements for lead and paint and surface coatings. And that's on all products that are regulated under section 16 CFR 1303 which is the lead paint requirement. But it also reduced, it had special requirements for children's products that are regulated under that provision. And it, while it reduced the requirement, it also required, it also made those products banned under the Federal Hazardous Substances Act. Which prior to the Consumer Product Safety Improvement Act, they were banned under the CPSA. Now they're banned products under the FHSA. And that's just for children's products. Adult products are still subject to the CPSA requirements and they're regulated under the CPSA. The phthalate limits are also another one of the chemical limits that the CPSIA imposed on children's products. So the CPSIA has special requirements that are specifically for children's clothing and textiles. The lead content and surface coating requirements are for the accessible components on a textile product. So you have to look at things like buttons and snaps and zippers and other notions that are used on a children's product. You look at whether or not they have a surface coating on them, whether they're painted or whether they're a metal product. You look at whether or not that lead component is accessible or inaccessible. Some of the inaccessible metal components that might be on a product are things like the zipper tab stop. That's at the bottom of a zipper that's embedded into the garment. It's really not accessible. So we generally don't look at that and determine whether or not it has a lead content that's within the requirements. And then the component part testing is listed on this slide because it's important to understand the component part testing rule for garments and things like that where you can rely on a component part test to issue your certification that the product is compliant with the lead requirements or the phthalate requirements or one of the other requirements that a product is subject to. 16 CFR 1500.91 is a provision that's under the Federal Hazardous Substances Act that lists out determinations that the commission has made on certain products and whether or not they need to be tested to the lead content and lead paint requirements, I'm sorry, not lead paint requirements, the lead content requirements. And it excludes from testing fabrics that are dyed or that are undyed and non-metallic threads. It states that those products do not require third party testing because the commission has found from data that was submitted to the commission that they do not ever exceed the lead limit. So there's no requirement that you provide third party testing or certification for those things that are listed in 1500.91. That exclusion does not provide an exclusion for things like screen printings because screen printing generally is considered a surface coating and it has to be tested to the 90 parts per million limit. It is not subject to any exclusions, screen printings, thermal transfers and items like that where a dye is put on a fabric and it doesn't actually absorb into the fabric, those things have to be tested to the lead requirements. We determine compliance by testing the finished product. You also could either test the finished product or test the components. So if you had a thermal print that you were putting on to a t-shirt per se, you could take that thermal transfer and have the transfer tested, the dyes that are, or the pigments that are used in their transfer, you could issue a component part certification for that. Transfer and that would be acceptable for your certificate. As a manufacturer, you have to keep all the records of what you've used component part testing for. So when CPSC says to you, well, we tested this product and we found lead in it, let us see your testing, let us see your certificate, you give us a certificate and we ask you to see the supporting documentation for that certificate. You need to be able to provide the component part certificate and any other certification and testing that has been done on that product. Now, screen printing on children's sleepwear has an additional requirement that it would need to be tested for phthalates also. So, and it's subject because it's considered a childcare article. Phthalates are chemical plasticizers. Whoops. They're chemical plasticizers that are often used in the production of many types of plastics, inks, paints, and other products. They help dyes go through the tubes when they're coming onto a garment and they're used to keep plastic soft. There are six types of phthalates that are prohibited in toys and childcare articles. Three of them are permanently banned and three of them are subject to an interim ban. It applies to all plasticized component parts and toys and childcare articles and it's anything that's accessible to a child when the child is using the product would be tested. Children's products must be tested by a CPSC accepted accredited third party laboratory. There are four different types of testing that are done for certification purposes. The first is initial testing and that's the test that you do when you first make a product and that is your initial certification test that is done. Then if any material change has been made to the product you would have to retest the product and provide certification for that retest. Then there's periodic testing, component part testing, and the children's product certificate is issued based on the passing test results by the third party testing. This slide actually just defines what the different types of testing are and certification. This is important because periodic testing for children's sleepwear, the periodic testing requirement for flammability can be met by the GPU testing that's done on their sleepwear standard. The sleepwear standard was pretty progressive when it was designed because it really was written in a way that you had to ensure continued compliance by doing the types of testing that you have to do.  Later on today, when we do the testing panel, you'll see some of the difficulties that the CPSIA has introduced into the manufacturing of children's sleepwear because manufacturers actually have to think forward about how many garments they're going to make, how much fabric they're going to use, how much testing actually has to be conducted by the third party laboratory, and provide both the physical products to the lab and the information to the laboratory so that they know what they actually have to do to get a complete test done for this company. It is not easy. You really have to do the math, you have to do the calculations, and you have to know what you're making. You have to know the problems that you might have and where changes might occur in the production process to make sure that you're testing enough to ensure continued compliance with those products. As you'll see later on in my presentation, I'm going to talk a little bit about the violations and the recalls that we've had in children's sleepwear over the last five years. We have had significant increases in the number of sleepwear violations and recalls. That's another reason why we wanted to do this seminar is because we really felt that with new people on the market, maybe people really didn't understand how the regulation was put together, what was required in the standard, and how to really make sure that you're testing enough correctly so that when we ask you questions about your compliance, you can provide the information that we need so that we can assess whether or not the results that we have are accurate. My next slide is component part testing. This is helpful because it allows you to test components and have third-party test results from that component and issue your certificates for your product based on that component. You have to make sure that the testing that's being done is valid, that the product that you're getting from the component part manufacturer is accurate, that it's related to the test result that they've given you, and that it has been tested, if it's being used in a children's product that has been tested by a CPSC-accepted accredited third-party laboratory. We've seen problems where companies have had products tested by a third-party lab that's been accepted by CPSC, but they haven't been accepted for the specific test. They may have been accepted for testing to the lead content rule, but they haven't been accepted for the lead paint rule. You really need to know what you need to have tested, what testing is being done, and whether or not that lab is the right lab to do that testing. It requires a lot of knowledge by the manufacturers, a lot of knowledge by importers, and a lot of knowledge by the labs. We've seen pretty good results from the laboratory, so I'm not slamming any labs. I just want everyone to know that you have a responsibility as a manufacturer and importer to know your product and to know the right questions to ask of the lab, because they can only answer the questions that you ask. They can't answer things that they think you might want to really know. So it's up to you as the importer or the manufacturer to know the right questions to ask, and I'm hoping that you'll learn some of that today. Periodic testing, as I said, that it's met through the government production testing for children's sleepwear. Of course, other notions and other things on the sleepwear have to go through the periodic testing. They're not part of what's done by the GPU. I mean, that's specifically flammability testing. So you have to have the continuous testing on the other items that are included in your children's sleepwear. I threw a slide in on small batch manufacturers. Later, in the next panel, you're going to hear from the business panel, and we have our small business ombudsman, assistant small business ombudsman on that panel, and he'll probably talk a little bit about what the small batch is, but a lot of, we found that because the industry has really changed, the sleepwear industry has really changed. 90% of the products are imported. A lot of them are sold online. There's very few brick and mortars. A lot of those companies are small businesses. They're doing less than the 7,500 units of the same product within a year and have availed themselves of the use of the small batch provisions. It allows companies to register with the agency.  They can have another laboratory do the testing. So some of the restrictions or some of the costs that are associated with the implementation of the Consumer Product Safety Improvement Act were reduced for those small batch manufacturers so that they could continue to do business. Will and his office can provide you information on that if you have questions, and when we're during the question session, you can ask Will about small batch. Children's product certificates. There's special elements, seven elements that have to be on a children's product certificate. They're a little different than a general certificate of formity. The thing that they require that a general-purpose product doesn't require is they require identification of a third-party CPSC-accepted laboratory. One of the other requirements of the Consumer Product Safety Improvement Act for children's products was that all children's products have tracking information on them. And the tracking labeling law or the tracking requirement was put in place so that manufacturers could identify their product when it was involved in an incident or if they had a defect or something that they needed to report to us, a violation of a standard. The tracking label or the tracking requirement was put in place so that they could identify the product. They could identify the frame of time that it was made. They could identify information about the batch or run number. They could limit the scope of what they were looking at. It's also in place so that a consumer can identify the product that might be recalled or they can identify the product to the manufacturer or the importer if they have a complaint about that product. So it's a two-fold requirement. It benefits the manufacturer importer and it benefits the consumer. It's very important to have all of the elements that are required in the tracking requirement on a product. For apparel, the RN number can act as one of the elements that's required in the tracking requirement. It doesn't suffice for all of the requirements, but it does provide information to the consumer who the manufacturer of that product is. These are the other elements. I'm not going to go through each one. My office, the Office of Regulatory Enforcement, has concerns about products and these are our main concerns when a product fails, a safety standard or a band. We're concerned about that under any of the acts and we want to find those products. The commission is concerned when a product fails to comply with a voluntary standard and that voluntary standard is one that the commission relies upon. And then if a product has a defect that could provide a substantial risk of injury, the commission is concerned about that and we expect you to report those things to us. There's a reporting requirement under Section 15 of the Consumer Product Safety Act and also under Section 15 of the Federal Hazardous Substances Act for Children's Products. Any product that fails to meet a rule regulation standard or band under the CPSA or one of the other statutes that's a similar rule has to report that non-compliance to the commission. We have a very nice portal on our website for you to electronically report that information to us. We still take reports by paper but we really like when you do it electronically because it's easier for us to keep track of the report and where it is in the process. We also expect you to report to us when a product contains a defect that would create a substantial product hazard and also when a product creates, when you've received information that makes you believe that the product creates an unreasonable risk of serious injury or death. So those are the three requirements for reporting to the commission. The statutes make it unlawful to manufacture for sale, sell, distribute, offer for sale or import any product that doesn't comply with the mandatory or standard or band. That means that once you've determined or we've determined that a product violates a standard, you can't move that product without permission from CPSC. It's unlawful for you to move it. Now, usually when we ask you to recall a product, we'll ask you to bring all product back to you. That's us giving you permission to move that product in commerce but you can't move that product in commerce. It's a prohibited act. If you resell that product to anyone after it's violative, that's considered a prohibited act. And Lauren Kleinman is going to talk about the prohibited acts and the penalties for committing those prohibited acts in just a couple of minutes. So some of the other things that are prohibited is a failure to report information to CPSC under 15B of the CPSA and also under the FHSA, a failure to certify your product, a failure to include tracking labels when it's appropriate to have a tracking label. Now, we do understand that sometimes, and the tracking label requirement allows for, sometimes when it's not, when you're not, it's not practicable to put tracking information on a product. You don't have to do so. But generally when we find a product that doesn't have tracking information on it, we will ask you, you know, we write a letter to you. We send you a letter of advice. We say, you know, we picked up this product that has no tracking on it. Can you explain why it has no tracking? And you'll provide information. Sometimes there's not enough space. Generally on apparel, there's enough space somewhere on the garment to stick a tag with the information or you can combine tags to get all the information that you need for tracking. So we generally don't have a practicability problem with apparel and providing the tracking information. But I thought I'd throw that out to you because we're talking about other children's products. So sometimes they don't have all the tracking information, but they have to give us the rationale for not putting that information on the product. And then our last is, it's Privated Act to sell any recalled product that's been announced by the manufacturer. So if Company A buys a product from Company B in China and recalls that product, Company A recalls the product. They're the importer of record. And Company C has the same product from Company B and it's the same batch. It's the same product. It has the same violation. That product would be suspect and we would look at it and we would determine whether or not that Company C that's selling that product is committing a prohibited act. So you really have to be aware of our recalls. You have to be aware of what's going on. Not saying that you had no knowledge of a recall is not a defense for causing that prohibited act. The way my office does enforcement and surveillance is we write programs that go out and inspect companies. We generally will look at several different product areas and have an annual program where we go out and try to determine the status of compliance for that product area. We listen to complaints. We have a database called saferproducts.gov where consumers, companies, health professionals can report incidents that they see or problems that they've had with products and we review that data quite religiously on a weekly basis if not daily depending on the time of year and what we're looking at. But we look at complaints. We follow up on complaints. We get a lot of trade complaints from your competitors and we follow up on them. We take them seriously. We also do retail surveillance and we spend a lot of time these days doing internet surveillance. We have a group of people that are watching the market all the time. It's busy as you know. I mean the internet's crazy and there's a lot of information out there, a lot of products out there and we try to follow up as best we can. We also do a lot of work with states and the AG offices and try to follow up on complaints that they make to us. We also have a group at the ports which you're going to hear from them later on this afternoon. And our investigators that do field inspections and actually carry out the inspections, the establishment inspections. So Jackie Martinez and Mike Giella will be talking this afternoon just about that and how we do it and what to expect when that's being done. We also go to industry trade shows, spend a lot of time looking at new product coming out on the market. I mean we don't do pre-market clearance as an agency but we like to see what new products are coming out and where we might need to focus some of our resources for new products. And we pick up a lot of samples. Last year I think we looked at over 4,000 samples. So we're a small agency and we have 500 employees, 550. But we spend a lot of time, the office of compliance is small, the field inspection group is small, the imports group is small. We spend a lot of time picking up a lot of product, looking at a lot of product. And we have available on our website a place where the LOAs are posted for all our violations for the year. And you can see the types of samples that we've picked up and the types of violations that we found for the year. And it's posted every quarter. The LOAs are posted every quarter and it's consecutive, keeps adding on. So I think there's three years of data on the website. This is just what we do at the ports. We look at shipments, we identify dates of arrival and look at shipments that we might want to sample based on entry data that we get. So when we have violations, we generally will ask for some type of a corrective action depending on the violation that's been found. Some violations are de minimis violations and we just ask you to correct future production. Some violations that we find have to be corrected at the time that we find the shipment. So depending on the severity of risk of injury, we will ask for different corrective actions. We can seize products at the port. We generally work through customs to do that seizure, but we do seize a lot of shipment at the port. And that information is also on our website. You can see how many shipments we've seized for the year. I think we issue quarterly reports there too that have a listing for the quarter, how much we've seized. We can enjoin companies from continuing to violate the law. And we can refuse admission through customs. And we have penalties, as I mentioned earlier, that Lauren's going to talk about in a minute. So I just wanted to give a quick summary of the types of violations that we found over the last five years. Now, I hope you, can you see that in the back? It's okay? Okay. So this is a pie chart of the types of violations. This is for all violations, the top violations at the agency. And for sleepwear over the last year, we've had 347 violations, which only makes up 3% of the violations that we've found. This is specific to sleepwear and we have different codes that we look at. We have flammability violations, tight fitting dimension violations, sleepwear labeling, the sleepwear policy, which is the loungewear policy. I don't know if you all are familiar with that, but CPSC issued a policy stating that we consider loungewear to be children's sleepwear. Children's loungewear to be children's sleepwear. And we will expect that sleepwear, that loungewear to meet the sleepwear standards. It's considered traditional sleepwear. So it's subject to the requirements. And then the other children's sleepwear violations are things like, Carrie went down, the others. I think they're like labeling, minor labeling violations and tracking labels, things like that. So we have a small number of those. So this chart talks about recalls by violations. So you can see the types of violations that we find significant enough to require a recall. We had 65 sleepwear flammability violations over the last five years. And that's a lot. I mean, the defect side of the Office of Compliance does a lot more recalls than we do under section 15. The regulated side generally traditionally has always done fewer recalls because we have a standard in place and that standard tries to keep the severe hazards off the market. So when we find flammability violations, we consider them to be severe violations and we generally do recall anything that presents a flammability risk. So sleepwear recalls, you can see that we had 46 flammability failures and they were recalled. 17 were garments that exceeded the tight fitting requirements. Generally on tight fitting, we look at where that dimension is exceeding the requirement and assess whether or not the allowance of that product to be sold is going to put children at risk. So there is a calculus that goes on for almost every product violation in the regulatory side. There's a calculus that goes on as to whether or not the violation is significant enough to require a recall of the product. We look at the number of products on the market. We look at the severity of injury and risk and we look at how long the product's been on the market. So that is the end of my presentation. So I am now going to call Lauren Kleiman to the podium and she is going to talk about penalties under the Flammable Fabrics Act. Thank you. Thank you, Mary. Morning. I'm going to talk about a brief overview of the penalties available under the FFA. There's two different types of penalties. I'll first review the civil penalties available and then the criminal penalties. Under Section 5E of the FFA, any person who knowingly violates a regulation or standard issued under Section 4 of the FFA shall be subject to a civil penalty not to exceed $100,000 for each such violation. The commission may seek a civil penalty of up to $100,000 per violated product and up to a maximum penalty of $15.15 million for any related series of violations. I'd like to note that effective January 1, 2017, the new adjusted maximum civil penalty amounts are $110,000 for each violation and $16,025,000 for any related series of violations. Term knowingly is defined in Section 5E4 of the FFA, knowingly means having actual knowledge or the presumed having of knowledge deemed to be possessed by a reasonable person who acts in the circumstances including knowledge obtainable upon the exerciser due care to ascertain the truth of representations. Next I'll speak about two different examples of civil penalties for the sale of flammable children's sleepwear. In May 2001, the Federated Department Stores of Cincinnati, Ohio agreed to pay a penalty amount to settle CPSC charges. The amount was $850,000 that it knowingly sold flammable garments as children's sleepwear. At the time of this case I'd like to point out that the maximum penalties were lower than what they are today. The penalties were $8,000 per occurrence and $1.8 million for a related series of violations. In this case, CPSC charged that on numerous occasions from January 1999 through January 2000 Federated Department Stores sold, offered for sale or imported about 600,000 loose fitting, 100% untreated cotton garments that were marketed, promoted or designed as children's sleepwear or robes. These garments were sold on racks in children's sleepwear departments with or next to garments specifically labeled as sleepwear. Retail sales clerks told CPSC investigators that the garments were in fact sleepwear. In addition to paying the penalty, Federated Department Stores initiated a program that included the following. One, they would tag or sticker all children's sleepwear on the sales floor so that it's clearly and easily distinguished from playwear and underwear. And two, implement a program for all Federated Department Store employees to provide them with extensive training. Another example of a civil penalty for the sale of flammable children's sleepwear involves the limited ink of Columbus, Ohio and its subsidiary mass industries of Andover, Massachusetts who agreed to pay a penalty of $500,000. Again, this amount was under the old penalty amounts. The $500,000 penalty settled CPSC allegations that the companies violated the FFA by knowingly importing and selling flammable children's sleepwear. The specific allegations in this case were that the limited and mass placed children at risk by knowingly importing and selling through limited two stores, 100% polyester pajamas with a satin finish, and 100% polyester fleece bathrooms that failed to comply with federal sleepwear standards. In addition to the civil penalties available under the FFA, criminal penalties are also available. Under Section 7 of the FFA, a violation of Section 3 or 8B of the FFA, or failure to comply with Section 15C of the FFA, is punishable by a imprisonment for not more than five years for a knowing and willful violation, a fine, or both. Criminal penalties to include asset forfeiture, in addition to the penalties provided by Section 7, the penalty for a criminal violation of this act or any other act enforced by the Commission, may include the forfeiture of assets associated with the violation. An example of a criminal case under the FFA is the Denton Mills case. In 1993, the U.S. Attorney for the Northern District of Mississippi charged that Denton Mills, Inc., a major domestic manufacturer of children's sleepwear, shipped to retail customers approximately 1200 pairs of children's pajamas that the firm had tested and found to fail CPSC flammability requirements. The firm pled guilty to a five-count information alleging violations of federal law and regulations that ban flammable clothing. Under the plea agreement, the firm agreed to pay a $100,000 criminal penalty. Criminal penalties are in fact available, and the CPSC has pursued them where warranted. In this case was the last example we have of where such was done. I'll let Mary introduce the speakers for the business panel. Thank you, Lauren. Understanding all the requirements and understanding that there's hefty penalties that you can pay if you don't follow all the rules, we thought it would be nice for you to hear from a business panel for the seminar. So they're going to come up and talk about some of the best practices that they've put into place, or that they advise on, and I'd like to call it to the table. Will Cousy, Allison Barron, and Doug Highland. Will Cousy is our special assistant to the Small Business Ombudsman. Will started in the Office of Congressional Relations serving four years at CPSC and then moved to the SBO office in 2015. The SBO is the liaison between the agency and small business. The SBO serves as the agency's primary point of contact for small businesses seeking advice and assistance and complying with agency rules. The SBO provides information, guidance, and technical assistance to small businesses in a fashion that's clear, easy to understand, and consistent with agency policy. And I don't know if any of you have visited our website lately, but we have a wonderful regulatory robot to help people get through the regulation requirements and the SBO's office put that robot together, so it's been really nice for people to be able to walk through that and then have some information about what they want to talk about before they call either the SBO or the Office of Compliance. Alison Barron is an attorney, she's a member of the law firm Sherrod's Palling Carter Global PC. Ms. Barron's practice areas include a wide variety of global customs and international trade law matters with a special expertise in textile and apparel and art and antique issues. She also has extensive experience advising clients on other governmental agency matters including product safety issues with an emphasis on children's products and compliance with U.S. Fish and Wildlife Federal and State Laws and Regulations. Product labeling requirements of the Federal Trade Commission and compliance with the sanction programs of the Office of Foreign Assets Control. Doug Highland is from Zulele. Upon graduating from college, Doug moved to the West Coast seeking fame and fortune. Instead, he ended up working in regulatory compliance and he's happy about it. He's worked in private label development for a specialty retailer and currently manages product compliance for Zulele LLC, an online flash sale company joining when his company was a startup. I'd like to welcome all the panelists and Will if you want to come up to the podium in your presentation. How's everyone doing this morning? So I'm just going to jump right in. Mary gave a nice intro of what our office does. The big takeaway is that you can always give us a call. Lawyers and businesses, importers, manufacturers, no matter, large or small. Happy to talk to anyone about the requirements or talked about what I'm going to be talking about today. As best practices for businesses to try to give you a leg up in putting your business in a good position safety-wise and if you run into problems, some tips that you can use to try to mitigate the problems that you're finding. The first slide here, really the big takeaway is you should really be thinking about safety from the ground up from the very first prototype that you're designing. That's the best time to be thinking about building safety in, thinking about the compliance requirements. You know, you're calling our office, maybe you're calling the state government. California has a lot of state laws, Washington state has a lot of state laws, and educating yourself about what the regulatory environment is like and what you can do from the design stage to help make your product safe. Part of that is considering not only consumer use but then misuse. That's the side that a lot of people forget is how a product can be misused and end up in a recall. You know, you thought you did everything right and then consumers start misusing it in a very dangerous way. And then it creates a problem not to call anyone out, but Bumbo I think is a good example of that where there was a lot of misuse from the consumers and necessitated a recall to try to guard against those risks. Here I want to talk about the supply chain and how important it is to make sure you're doing your due diligence to work with suppliers who take safety seriously and who aren't just trying to pull a fast one on you and make a quick sale.  Now their product's on the water and we have two weeks to try to get a safety tested, certified, and approved before it lands at the port. And that is not infrequent occurrence. So don't put yourself in that position, question your suppliers, and if you're working on drafting up a contract with them, build in safety elements and compliance elements, maybe put the onus on them to get it safety tested, even though the importer or the manufacturer are the ones that need to certify and worry about that. Another great service that I often talk about is having some kind of independent body go and do audits of your factory and your suppliers. That's a really important service that will put them on the spot to show that they're actually doing what they're saying they're doing. So I think being smart about the supply chain is really critical in ensuring you have safe products and ensuring that you don't get caught holding a lot of non-compliant products that have to be destroyed as soon as they land at the port. And this next slide, it goes into what I was talking about a little bit at the beginning, just being knowledgeable of the regulatory environment. You want to review your consumer feedback, not just from potential safety hazards to report, but also just if someone's talking about a scenario where they used it in a situation that is not okay, you need to maybe go back to the drawing board and think about for your next iteration, maybe building in some additional safety elements. Mary already talked a lot about reporting requirements. My big takeaway there is a lot of the civil penalties you see are because firms did not report in a timely manner. That is something that you do not want to be caught doing. So if you're not sure, you can give us a call. We can talk about the process and what reporting requirements are, when the situations are that you have to report, and the kind of process that you can expect if you report what happens when you report. We can talk about that in a general way. Monitor recalls, as Mary explained, there are always lots of sleeper recalls, despite this standard being out for a long time. We see that all the time. Try to stay up to date on where those recalls are happening. You can get emails from us. The SBO sends out email alerts. You can get recall notifications. That's great to just get that information. I get all the emails that our agency sends out. I think it's really useful and really helpful to stay on top of what's going on. I will just give another plug for the Federal Register. If you go to the CPSC page and sign up for alerts, it'll let you know at any time an NPR or a new rule is being proposed. That's also helpful information to see as well. I can't stress enough the most important thing in my opinion when you're in a situation where you're working on a recall or corrective action with someone here at CPSC, it's just to be cooperative and friendly with your CPSC staff member. I can't tell you how many times we hear of people just being, frankly, rude and yelling at the compliance officer. That's not going to help your case. That's not going to help you out. Really, the most important thing is just be friendly. Contrary to popular belief, federal employees are people too. Just keep that in mind if you're in this situation. Kill them with kindness is what I always say. When you're in that situation, you have a little bit of say on how your corrective action plan is going to turn out. You can throw out suggestions. All the officer compliance might say no, and that's not acceptable, but you can throw out suggestions to try to see what is an effective action for you and for the CPSC. In certain circumstances, you could think about getting conditional release if it's a situation where it can be fixed like a tracking label violation. You can probably add tracking labels, but if it's a lead violation or something else, maybe it has to be destroyed. Think about whether conditional release is possible as your compliance officer. It might not be, but definitely worth thinking about. Fast-track recall, a lot of firms I talk to, they just want to be done with the recall as soon as possible, and that's the best way to do it. I would say from a non-regulated side, regulated usually doesn't do fast-track, but from a non-... They're just fast all the time, exactly. Just be proactive in working to correct future production and educating yourself, and that's why we're here. We're the educators. We're not involved in the recalls, but we help educate, and especially after the fact, we often get brought in to help work with a firm to try to help them fix it going forward. We don't want to see you again in our Office of Compliance. Mary doesn't want to see you a second or a third or a fourth time. She wants to see you once, and then you're fixed, and your products are safe going forward from there on out. Part of what you can do to be prepared is think about writing a comprehensive recall safety plan, building in risk management guidelines, and ISO has some great standards that you can check out. You can purchase to go look at that and try to build a plan for yourself. I can't tell you how helpful that is if you find yourself in a recall situation having a plan of action in place. You're not scrambling. Everyone's got a job and knows what to do if there's a recall happening. It's really important and will make your recall situation less painful. Obviously, with children's sleepwear, you have to use tracking information, lot or batch controls, but for those of you that are doing other product areas beyond just children's sleepwear or children's products, I think it's a great idea to have that system in place for all your product areas. It'll just make your targeting of potentially bad shipments that much better and probably reduce your overall risk in the long run. Everyone I talk to, I say document your steps and efforts to comply, not just the test report, not just your certificate of compliance, but say if you call the SBO up and we have a half an hour phone call about compliance, write it up, write a little memo to yourself, date it, and put it in a compliance file, and it shows that you're taking active and proactive steps to try to make a safe product, make a compliant product, and that could help if you find yourself in a recall situation. The CPSC staff will see that you're making good faith efforts to try to make a safe product and might give you the benefit of the doubt if you're a first-time violator. So that's something that's important. Just document all of your safety work and compliance actions. And the last thing I want to just leave you with is challenge yourself to make a safe product. I mean, it's not just about, you know, that there's a financial liability, but there's the liability of life, and you don't want to be in a situation where you made a product or you imported a product that results in the death or a serious injury of a child. You just don't want to be in that situation for various reasons. And so as you continue to do that, the SBO is here to offer guidance and support of you. So feel free to call or email anytime. I just want to give a quick plug to our new small business ombudsman, Shelby Mathis. Some of you, she's in the back right there. Some of you might have met her already or saw my email announcing her. She's excited to be here, and so we're both here now and happy to accept your calls and questions anytime. Thank you. I think Allison is next. So good morning, everybody. Thank you. What I wanted to talk to you about today is not so much the specific regulatory standards because you will be hearing a lot about that from other people, but it's the concerns that small and medium-sized businesses may have when contemplating a children's sleepwear program. As William said, it's important to know the rules before you decide to manufacture sleepwear. A lot of companies say we want to do sleepwear. It's popular. It's a hot topic. It's a hot product right now, so we want to sell it. But they go into that decision without necessarily knowing that they need to test the product, they need to certify the product, they need to label the product in specific ways, so I wanted to give a quick overview of some of the things companies should consider. Particularly small and medium-sized firms have the same challenges and obligations that larger companies who may have more resources do. So it is important that before just embarking on a sleepwear program that these companies make mindful decisions on whether to sell sleepwear and the types of sleepwear they're going to manufacture. So are you a company that's going to sell sleepwear? And as we said earlier, loungewear and robes are considered sleepwear, so you can't just caveat yourself out by deciding to sell particular products. Have you identified your risks and obligations with respect to testing, certification? Are you going to do only tight-fitting sleepwear or all-sleepwear? Do you know the state's requirements with respect to treatments that you may be using on regular sleepwear to make them non-slammable? Have you identified the particular age of the wearer of your products? There may be different rules depending upon the age of the wearer. Have you partnered with good vendors? It is essential that your vendors know the requirements and that you trust them before you embark on a sleepwear program because they are the ones who are manufacturing the product to your standards. And if they don't do so properly and if you are relying on them to do the testing for you, you will find yourself with a lot of headaches. So I highly recommend before you decide to design or manufacture any sleepwear that you carefully evaluate your partners. I also suggest, based on doing this with plenty of clients, that you identify the regulations applicable to your sleepwear products before you start selling them. You can get this information from the CPSC website, from council, from federal register notices, from your laboratory partners. Before designing and selling sleepwear, you should also prepare effective testing protocols. They should be in writing. They should be detailed. And they should be able to work, either on your company today or not there tomorrow. They should be known and understood from everyone in the company from the highest level to the lowest, all of which are involved in the sleepwear manufacturing process. Also, as William said, if you do have a problem before you make sleepwear, you better have a corrective action plan so that you know what to do if a problem occurs. How to communicate about it internally and how to identify the CPSC at the earliest possible time. So, a lot of this a little bit of a repeat of what's already been said and will be said this afternoon. But in addition to understanding the regulations, how are you going to implement specific company protocols? When are you going to test? How often are you going to test? How many units are you going to test? What are you obligated to test based on who you're selling your products through? And what are you comfortable with testing based on the volume of products you're manufacturing? Who's going to manage this process? Are you going to rely on an internal employee to do this? Are you going to use outside resources? Have you partnered with the right laboratory, both here in the United States or overseas? Have you made sure that your lab is certified to do the testing that's necessary for your product? Have you made sure that your certification requirements are in place? Do you have the correct documentation? The correct record keeping? And where are you going to keep your files? And how are you going to access them on a regular basis? These are all things to consider and should be discussed with your advisors long before you start selling sleepwear. Finally, it's also important as I said earlier that companies engage in a comprehensive training program if they're going to be doing sleepwear. I train companies as often as every six months. Some people do it more frequently. Some people do it less frequently. So how often are you going to do this? Who are you going to teach? I obviously recommend that everyone involved in the supply chain be involved. That includes your manufacturers, your distributors, your internal employees, your laboratories or excellent partners in providing this training if you don't want to pay for more. Or as I said you may have an internal personnel who can do this. So everything you do should be in writing. You should because you want to make sure you have a document that can be utilized as a resource by your employees on an ongoing basis in between the relevant trainings and you have to identify what topics you're going to discuss. Everyone should have a copy of your internal safety compliance manual so that you can go through those topics and maybe one month you'll discuss testing the next month you'll discuss the rules. But it's important that you do it on a regular basis. Finally as I mentioned earlier you are also not only legally obligated but sort of morally obligated to retain records of all your testing of your internal safety protocols you need to make sure you're complying with the mandatory retention period as well as your internal policies regarding retention and and that's really all I wanted to say today. I wish you all good luck. Hello welcome everybody I understand there's a lot going on in DC these days so I really appreciate everybody coming in today and then participating in the seminar with us. I'm here to talk about sleeper compliance from our retail perspective so I want to talk to you a little bit about our company Zulily to operate how that's different from most retail models talk about our compliance program and then some of the training and tools that we've rolled out to help with our compliance program so Zulily is for those of you that don't know because the company is relatively new sorry this is directly from our marketing department so I'm not going to go through all of this but really the idea behind this slide is to give you guys a sense of what the company is about we're fun, fast and fresh the way that our company works is we are an online retailer only we don't have bricks and mortar stores so we're squaring that online retailer space that's been talked about a little bit today the way that we work is we will work with a group of vendors and we will curate events of their products that we will offer for sale on our site for a set number of days so we're a flash sale site kind of like guilt, kind of like a group on so what we do is we offer products for sale on our site we'll gather all of our customer orders then we'll turn around and issue a purchase order to our vendor the vendors will ship it to our warehouses and then we'll ship those orders out to our customers so we're very light on inventory which is really good and it also presents some challenges our target customer is moms so we really focus heavily on anything that a mom will want from wearing apparel to shoes to home decor to anything she's going to want to buy for her kids like I said the company is relatively new our website launched actually in 2010 we're about to celebrate our 7 year anniversary these are just some of the major milestones I won't go through all of them the company actually went public in 2013 2014 we actually had a billion dollars in sales which is pretty I think pretty impressive for a relatively new company in October of last year we joined the QVC group we were pot up by Liberty Interactive Media so we're part of the QVC Liberty Interactive Group and then in September of this year we built out and enhanced if you will our Columbus campus so our headquarters are in Seattle that's where I live and work we also have a buying office in Columbus and we just expanded that campus and we have a lot of our customer service folks so because of the wide variety of vendors that we work with and kind of everything on this slide it presents a lot of opportunities if you will for our compliance program so when I talk about the wide variety of vendors I really mean we are working with vendors that have been in business for 50 years and really understand the regulations and they have everything tied up as they should we also work with a lot of smaller vendors that have a lot of needs if you will that we have to help walk them through their understanding of what their obligations under the CPSC compliance regulations are another thing that we get to deal with that we're fortunate to deal with is that we launch thousands of styles a day so of those events that I talked about there could be one or two hundred styles in each of those events and we're putting about 100 of those events on our website every single day so the volume of vendors is significant so the approach that we take is really giving the training and tools to our customer service folks our vendors and specifically to our merch team emphasizing high risk areas like sleepwear what are the things that they need to know what are the things that we need them to understand before they're offering those products for sale to our company and to our customers so we really focus a lot on product safety training that we've got that we've rolled out in our company for our merch team and for our customer service team so they kind of go through different levels so we kind of treat this like our college courses where we've got some basic classes we've got some advanced classes and we've got like your graduate level classes is how I like to look at it so our first one is an online compliance training this is our basic regulatory compliance class we've moved this completely online through one of our training portals and this just gives our merchants an understanding of what the CPSC is what the CPSC does we also talked to them about labeling requirements FTC labeling requirements just a little basic knowledge about advertising laws because everything that we put on our site everything that we're saying about our products we consider that advertising so we talk about truth in advertising it's just again, like I said, it's a basic class they take this module online, there's a few fun questions that we ask at the end and if they pass then they get credit for taking that class the next level of class is what we call our bootcamp training class which is basically taking that online compliance class and we do that in person with small groups of people that have recently been hired to the company depending on the time of the year the company hiring between I would say like 10 and 15 people a week into our company so the company's been growing a lot and so these are some of the ways that we try to deal with all of the new people that are coming into the company but the bootcamp training class again is for all of our new hires in our merchant organization and this is really where we go into a little more details about what they need to know about sleepwear what they need to know about outerwear with drawstrings just some of the things that they need to know before again before they're putting products for sale on our site the next level of training is our detail training so we've got this broken up by product category so we've got a training that we've got specifically put together for our toy buyers we spend a lot of time talking to them about the ASTM standard for toys like what they need to know about that we've got a specific training for our footwear buyers like what they would need to know before they're offering a footwear style for sale on our site and then of course we've got a detail training for our apparel buyers where we spend a lot of time talking about everything that's been kind of talked about before what are the requirements for sleepwear what is the flame resistance standard versus the tight fitting standard what are some of the things to look out for that what are some of the testing that needs to be done for apparel for lead for small parts what are the tracking label requirements and then we'll also spend a lot of time talking I'll go on this in the next slide a little bit more about what the CPSC considers sleepwear versus what they don't consider sleepwear these are quarterly trainings again we do this in a training room we've got a 20 page deck where we just go through all of this stuff and then we have ad hoc training where we do like some issue specific training an example of this is about a month ago two months ago actually we sat through and went and attended a meeting with everybody in our kids merchant organization and we talked to them specifically about the requirements for tight fitting sleepwear we went over the measurements with them we gave everybody little cards that have all the measurements on them by age range with some instructions on how to measure tight fitting sleepwear we gave them fun little tape measures with Zulele's name on it so that they know how to measure tight fitting sleepwear that's just an example of some of the ad hoc training that we do kind of as we see certain issues bubbling up through the organization more sleepwear training again is really focused on making sure that people that the vendors and the merchants understand the difference between the flame resistant and tight fitting standards when the buyers have those samples in their hands there's certain things that we want them to look for in their samples so that they can understand whether or not that product will comply we want them to look at labeling we want them to look at the hang tags again we also want them to understand what the measurements are we've actually had measurement parties where we've gone into a conference room with a bunch of vendor samples and we've got the tape measures and we're measuring everything so that everybody understands and everybody has a good understanding what those requirements are and then we also spend a lot of time in that training talking about the rules for sleepwear we want to make sure that we're only running sleepwear in like sleepwear branded events so we'll brand our events with certain tags to drive people to those events on our site an example of where we've had an issue in the past is we had a buyer that was running a sleepover with friends event and that was the name of the event and she had a lot of great sleepwear styles in that and she had also was intending to run a bunch of t-shirts in that event I was like you can't do that you gotta pull those t-shirts out of there unless you're telling me that those t-shirts are going to comply right with the sleepwear standards I was telling her for tight fitting sleepwear which they clearly didn't so that is something that we talk about a lot is making sure that when we're curating those sleepwear events that we're only including sleepwear in those we also give them a couple of rules of thumb of like what sleepwear is and what sleepwear is and so we've talked a little some of the previous panels have talked about bathrooms and loungewear are also sleepwear we get a lot of products offered or a lot of questions from our buyers and from our vendors about playwear that they're trying to push off I guess for lack of a better word as playwear so the rule of thumb the rule of thumb that we've given all of our merchants and all of our vendors is if you would not let your kid wear that outfit to school we're going to consider it sleepwear so it's kind of a rule of thumb that we've put out for the company in addition to the training we've got some tools that we've built into our internal systems to kind of help additionally to help prompt our vendors and our merchants to make sure that their products are meeting some of the requirements so this is just a screenshot of our item setup and in one of our we call it zookeeper it's our tool where we import products before they are set up for sale on our site and again there's just some prompts in here when something's been set up under a specific product category where we're asking the merchants to identify if either that sleepwear style is snug fitting or flame resistant and there's some prompts and warnings that the system will throw up at them to make sure that they're checking these boxes off in addition to that we're working really hard on our vendor setup this is another area of opportunity for us but we're working really hard on this space and I think we're making a lot of really good progress on this space we're removing a lot of our vendor setup processes to an online form basically what we're working towards is gathering as much information about our vendors compliance before we even start working with them and this is a great tool that we'll be rolling out we've rolled out pieces of it throughout this year but it's going to go into a full effect in actually February 2017 so our vendor portal is also where we put our vendor compliance manual which goes into all the we've got included information on their links to CPSC website about where they can find information about the type fitting standards where they can find information about the flame resistant standard of 16 15 16 16 and this is also a section where our vendors can upload any third party testing or children's product certificates that were requiring from them thank you that was my last slide thank you guys we have some time now we can ask some questions of the panelists does anybody have any questions for them or for Lauren or I from their early morning session oh wait just one second Cindy hello my name is Cindy from H&M and Doug I just missed you at the end that were you saying that you there's certificates of compliance and children's certificates you have all your vendors send them to you and you upload them into your system is that what you were saying by product category we're starting we've got a subset of products and vendors that were requiring them for before we run their products on their site and we're going to continue to roll that requirement out in 2017 but our intention is not to gather those for every single product we really want to do it based on on risk thank you for sharing that anybody else I was wondering when you talked about how you have your compliance set up in the training for your merchants do you then have a compliance department that oversees those areas as well or do the merchants handle the compliance that's a great question we do have a compliance department that does manage and create the content for those trainings and then we're the ones that actually do the trainings for the merchants and for the vendors and are the merchants handling the documentation they will have the conversation so if we're going to require some documentation from a vendor they'll manage that conversation with the vendor but then the compliance department is reviewing those documents and approving or denying those documents thank you I'm a product safety attorney Doug do you when you're doing your risk profiles are you doing it solely based on the product or do you have sort of risk categories for your vendors are you sort of tiering your vendors that you described earlier as having different risk characteristics as well we are tiering our vendors we've got some different criteria that we've got kind of based on the product categories that they're selling us the number of products that they're selling us like the volume of of products that we're doing with them and the dollar amount that we're working with them on so if we're if we're doing like a million dollars with a vendor and they're selling us exclusively sleepwear they're going to be higher risk than a woman's vendor that's selling us dresses