No.1 toymaker Mattel agrees to pay $12 million as settlement over Chinese products

Mattel Inc., the world's biggest toymaker, agreed to pay $12 million to 39 US states to settle claims it shipped toys tainted with lead paint.

The accord, filed today in state court in Boston, resolves a 15-month probe of Mattel's Chinese-made Sesame Street dolls, Dora the Explorer accessories and dozens of products shipped to the US last year, according to Massachusetts Attorney General Martha Coakley. The toys never reached store shelves, she said.

''Had there been danger involved, the amount would have been higher,'' Coakley, whose state led the investigation, said at a press conference. ''No harm actually occurred, but the risk of harm was very high.''

Under the settlement, El Segundo, California-based Mattel agreed to implement immediately new federal guidelines reducing lead content in toys by August 2009. The new standards cut the permissible lead content to 90 parts per million (ppm) from 600 ppm.

"Mattel has demonstrated its commitment to children's safety by pledging to meet standards even more stringent than those currently required," Mattel spokeswoman Jules Andres said in a statement. "Mattel also has taken steps that go beyond current requirements to give parents greater confidence that the Mattel toys that they buy this holiday season will be the safest ever."

Mattel fell 18 cents, or 1.2 per cent, to $14.42 at 2:24 p.m. in New York Stock Exchange composite trading. The shares had fallen 25 per cent this year through yesterday.

From 2 August 2007 through 25 October 2007, the US Consumer Product Safety Commission (CPSC) recalled approximately two million Mattel and Fisher-Price toys manufactured in China, alleging that the toys contained excessive lead in accessible surface coatings. (See: Mattel to take back 800,000 China-made toys in third recall)

At the time of the recalls, the CPSC standard permitted for lead in accessible surface coatings was 600 ppm. Lead levels taken of the recalled toys during the course of the states' investigation uncovered that levels not only exceeded the federal standard, but in some instances, tested more than 10,000 ppm and 50,000 ppm.

''Kansas will receive over $200,000 to resolve a 16-month investigation into the safety of Mattel toys,'' the state's Attorney General Stephen Six said in a written statement. ''This settlement should help stem the tsunami of toxic toys threatening to swamp playrooms and playpens, poisoning children,'' Connecticut Attorney General Richard Blumenthal said in a statement. His state will get $218,028 of the settlement, he said.

Mattel will pay $340,000 to New York, according to a statement today from Attorney General Andrew Cuomo, who warned of lead in ''innocent-looking products. Lead poisoning is one of the greatest threats to children's health and safety in New York, but is also one of the most preventable,'' he said in the statement.

Cuomo said he reached a separate settlement with five discount ''dollar'' stores and a local supplier in New York's Westchester County requiring strict safeguards after a sample of children's jewelry found on store shelves contained lead levels as high as 1,000 times the legal limit.

Other states involved in the Mattel settlement include Arizona, Florida, Kentucky, Missouri, Ohio, Pennsylvania and Vermont.

This month, a lawyer for California reached a similar deal with Mattel, requiring the toymaker to adopt the new safety standards early. In that lawsuit, California claimed Mattel and other companies failed to warn residents about the risks posed by lead exposure, which can cause cancer and birth defects. The failures violated the state's safe drinking water and toxic enforcement laws, according to the complaint.

China's manufacturing industry - a key supplier of toys, apparel and food to much of the world - has faced a wave of complaints in recent years, most recently as thousands of people have fallen ill as a result of consuming milk powder tainted with melamine, a chemical used to make plastics. Chinese-made pet food, toothpaste and lipstick have also been found to contain dangerous chemicals in recent years. (See: India bans Chinese milk products as WHO expresses concern)