June 2008
Extra
Reebok Fined $1 Million For Deadly Giveaway
Athletic shoe and apparel giant Reebok agreed in late March to pay a $1 million fine for distributing a promotional charm bracelet which resulted in the death of a four-year-old boy from Minneapolis. The fine is the largest ever paid for a violation of the Federal Hazardous Substances Act, according to the U.S. Consumer Product Safety Commission.
The charm bracelet, which was distributed as a free gift with the purchase of Reebok children’s footwear, included a heart-shaped pendant containing toxic levels of lead. The pendant was swallowed by the boy. The death resulted in a recall of 510,000 of the Chinese-made pendants that were distributed worldwide beginning in May 2004. Reebok denied violating federal law when it signed the agreement.
The $1 million fine levied upon Reebok for its role in distributing lead-laden promotional bracelets has left some distributors and suppliers fearing for their businesses. Following the March 2006 incident, 300,000 of the bracelets were recalled because of the product’s toxic levels of lead.
Reebok joins Nissan (140,000 travel mugs in Japan) and the State of California (300,000 lunchboxes) in having to recall large quantities of promotional products. Both the others did so late last year because of poisonous amounts of lead. In addition, Dunkin’ Donuts had to recall a million Halloween glow sticks last year because the items posed a choking hazard.
The Reebok ruling in particular “puts everybody on their toes,” says Kim Gibbs, owner of Blue Frog Promotions (asi/141801). “There is a fear because of the liability we may hold,” she says. “There is an awareness of accountability for us as the distributor and accountability for the suppliers.”
James Heuer, attorney for the family involved with the Reebok case, told the Associated Press: “Now other companies realize that ‘Hey, we take a 50-cent charm and it can end up costing us a million dollars.’”
Lori Gilson, owner of Award Depot and Promotions (asi/128021), says, “The customer is always thinking about price. They are not thinking about what could happen…It makes me wonder. Ultimately, I could be held liable because I sold the product. I don’t want to put my business at risk.”
Robert Marcus, president of Marcus Engravers Inc. (asi/68736), believes that manufacturers have some inherent risk in their business every day. “No one wants to intentionally hurt someone. If they knew the products were defective, then the fine was too low,” he says. “Otherwise this is the risk you run with manufacturing, whether it’s a lunch bucket that drops on someone’s foot or a product with sharp edges.”
George Uppling, owner of George Uppling & Associates (asi/350070), characterizes the recalls as “overblown.” “It is ridiculous,” he says. “We were raised on lead paint and I’m alive today.”
Still, the dozens of recalls last year (ranging from plastic toys to pet food), have forced many marketers to exercise greater caution. Reebok CEO Paul Harrington said in a statement that the company has since instituted procedures “which ensure all gift-with-purchase and promotional items and premium products associated with our brand meet or exceed the highest quality or safety standards.”
The Chinese government has also taken an active interest in overseeing safer production of its exports. However, “It will happen again,” Marcus predicts. “I just hope it doesn’t happen to me. We all know it can.”
KEN HEIN is a contributing writer based in Basking Ridge, NJ.
