Mattel fined $2.3 million over lead in toys

NEW YORK (CNNMoney.com) -- Toymaker Mattel Corp. agreed Friday to pay $2.3 million in civil penalties for violating a federal lead paint ban that resulted in the recall of millions of its Barbie, Dora and other popular-branded toys in 2007.

The Consumer Product Safety Commission said the fine against the No. 1 toymaker and its Fisher-Price pre-school division was the highest ever for the agency's regulated product violations and the third largest in its history.

While agreeing to the penalty, Mattel and Fisher-Price denied violating any laws, the CPSC said.

"This penalty should serve notice to toy makers that CPSC is committed to the safety of children, to reducing their exposure to lead, and to the implementation of the Consumer Product Safety Improvement Act," CPSC acting chairman Thomas Moore, said in a statement.

The agency said Mattel (MAT, Fortune 500) and Fisher-Price knowingly -- as defined in the Consumer Product Safety Act -- imported and sold children's toys with paints or other surface coatings that contained lead levels that violated a 30-year-old federal law.

In 1978, a federal ban was put in place that prohibited toys and other children's articles from having more than 0.06% lead by weight in paints or surface coatings.

The agency said the penalty settles allegations that Mattel imported up to 900,000 non-compliant toys between September 2006 and August 2007, including the Sarge toy car from the movie "Cars" and numerous Barbie accessory toys.

Fisher-Price imported up to 1.1 million non-compliant toys between July 2006 and August 2007, including certain licensed character toys, the agency said.

In 2007, about 95 Mattel and Fisher-Price toy models were determined to have exceeded this limit, the agency said. Lead can be toxic if ingested by young children and can cause adverse health consequences.

Mattel recalled millions of Chinese-manufactured toys in 2007 for both lead paint contamination and small parts hazards to young children.

In August of that year, Mattel recalled 1.5 million of its Fisher-Price branded products such as Elmo, Big Bird and Dora toys over risks associated with lead and small, high-powered magnets.

Three month later, the toymaker recalled another 9.5 million toys in the United States and 11 million in its overseas markets.

In August 2008, Congress passed the Consumer Product Safety Improvement Act, which gave makers and sellers of children's products such as toys, clothing and books have until Feb. 10, 2009 to comply with stricter standards for permissible lead, phthalate content limits and other mandatory safety requirements.

Following considerable pushback from toymakers who said the deadline was unrealistic and also applied to products that had already been shipped, the CPSC agreed to delay the deadline for the new testing and certification requirements by a year to Feb. 10, 2010.

"Today's settlement announcement by the U.S. CPSC resolves Mattel's outstanding issues with the agency related to certain matters that arose in 2007," according to a statement form Mattel.

"Mattel promptly took a series of steps after discovering compliance issues with some of our toys at that time. We were able to effectively minimize any potential concerns by launching a fast-track recall of the affected product in conjunction with the CPSC and other global regulatory agencies," the statement said.

"By taking several steps to enhance our product compliance protocols and procedures to confirm that every Mattel toy is safe for children to enjoy. Mattel continues to be vigilant and rigorous in ensuring the quality and safety of our toys," the company said.