Saturday, August 31, 2013

Not just playing around

Nor having much of a sense of humor, is the Consumer Products Safety Commission, according to the Wall Street Journal. It wasn't enough to bankrupt a company whose business was amusing bored office workers;
"In March of 2009, we ordered 100 sets of magnets from China. We literally put our last $1,000 each in the business," Mr. [Craig] Zucker says. At first the company filled a few hundred orders a day on its own website. But then Buckyballs made their way into the blogosphere. "Then very, very quickly other websites were calling to buy the product and resell it. We realized we had a really great brand."
In August 2009, Maxfield & Oberton demonstrated Buckyballs at the New York Gift Show; 600 stores signed up to sell the product. By 2010, the company had built a distribution network of 1,500 stores, including major retailers like Urban Outfitters and Brookstone. People magazine in 2011 named Buckyballs one of the five hottest trends of the year, and in 2012 it made the cover of Brookstone's catalog.
Maxfield & Oberton now had 10 employees, 150 sales representatives and a distribution network of 5,000 stores. Sales had reached $10 million a year. "Then," says Mr. Zucker, "we crashed."
Because someone (bored...too much time on his hands?) had a whim, costless to them, to pursue;
On July 10, 2012, the Consumer Product Safety Commission instructed Maxfield & Oberton to file a "corrective-action plan" within two weeks or face an administrative suit related to Buckyballs' alleged safety defects. Around the same time—and before Maxfield & Oberton had a chance to tell its side of the story—the commission sent letters to some of Maxfield & Oberton's retail partners, including Brookstone, warning of the "severity of the risk of injury and death possibly posed by" Buckyballs and requesting them to "voluntarily stop selling" the product.
Quickly they had no customers, as no business wants to put themselves at risk of offending the federal government. Except for the guys making the Buckyballs, they fought back, with ridicule;
On July 27, just two days after the commission filed suit, the company launched a publicity campaign to rally customers and spotlight the commission's nanny-state excesses. The campaign's tagline? "Save Our Balls."
Online ads pointed out how, under the commission's reasoning, everything from coconuts ("tasty fruit or deadly sky ballistic?") to stairways ("are they really worth the risk?") to hot dogs ("delicious but deadly") could be banned. Commission staff were challenged to debate Mr. Zucker, and consumers were invited to call Commissioner Inez Tenenbaum's "psychic hotline" to find out how it was that "the vote to sue our company was presented to the Commissioners on July 23rd, a day before our Corrective Action Plan [requested by the Commission itself] was to be submitted."
"It was a very successful campaign," says Mr. Zucker, "just not successful enough to keep us in business."
So, they dissolved their company. But, that didn't end it. Apparently you can't make fun of federal commissioners, if you know what's good for you;
The commission filed a motion requesting that Mr. Zucker be held personally liable for the costs of the recall, which it estimated at $57 million, if the product was ultimately determined to be defective.
This was an astounding departure from the principle of limited liability at the heart of U.S. corporate law. 
But, of course, government regulation couldn't have any negative consequences for job creation in the country. Could it?

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