Heard from a friend about a great deal you can get by placing a co-op order for cloth diapers, toys, baby carriers, or other “OEM” products for your baby that are made in China?
It might sound like the price is right, but there are some things you should know before you buy:
- There are consumer product safety laws that apply to all products sold in the United States that intended for children 12 and under. Some products are more likely to cause injury than others. Incurred risk varies based on the type of product being purchased. Co-ops are required to comply with these laws. Ask the co-op host to provide you with a general certificate of conformity (a GCC) for the products you purchased.
- Imported knock-off or “OEM” products may be manufactured, imported, and sold in violation of intellectual property laws. Importation, sale, or distribution of these products is illegal. The resale of unlicensed product by individuals is illegal.
- Products must be labeled correctly.
- Duties must be paid on imported goods. The duty rate on a cloth diaper or an insert with a synthetic absorbent inner is approximately 17%. The duty rate on a cloth diaper with a cotton absorbent inner or insert is approximately 9%.
- If you do not receive product from the co-op you bought into, you may have no refund recourse.
Co-op hosts are running a business, even if they aren’t making a profit. Laws govern trade practices for everyone doing business in the United States and apply to individuals, sole-proprietors, corporations, and co-ops, including those operating “under the table”. Laws are public record and information regarding compliance is easily researchable. While opinions on business-related laws vary, disagreement with a law does not invalidate the law or negate the risk of it’s consequences.
This list outlines some important issues that co-op hosts and the buyer should be aware of:
- As the importer of record, they can be held criminally liable in the event an injury occurs while a parent is using a product that they were responsible for importing. Laws and relevant penalties for breaking those laws apply to all children’s products, including baby carriers.
- A co-op host is responsible to know and is legally liable for significant penalties related to importation of products protected by patents, trademarks, or other intellectual property laws.
- A co-op host is responsible to correctly classify goods and pay the correct duty amount. There are fines for failure to correctly classify and declare product coming into the United States.
- A co-op host is also responsible to ensure that products are labeled in accordance with federal labeling laws.
- Certain health care devices (like reusable menstrual pads) may also be required to comply with FDA registration or testing requirements before they are legal to be advertised or sale in the United States.
To ensure that you’re buying legally manufactured and imported products, ask questions about legalities before you buy.
Good co-ops will deliver product in a timely fashion, be responsive to questions, be respectful to trade, import, taxation, and product safety laws and will be prepared with answers to your questions. Keep in mind, being identified as a “good” co-op by a website does not necessarily mean that the co-op is operating legally.
Bad co-ops may discuss ways to evade paying duty on an order. They might ask you to send funds as a “gift” or without specific protective wording that would protect you in the event they don’t ship your product in a timely fashion. Bad co-ops cannot provide you with proper GCCs. Bad co-ops may fail to collect and pay sales tax where appropriate. Bad co-ops may dismiss your concerns as irrelevant.
If you are involved in a co-op and have concerns regarding legal compliance, I suggest that you privately email the host for clarification regarding your concerns. Insisting on legal business operations is the right thing to do. It only takes a minute to ask the right questions. If their answer isn’t satisfactory and your concerns remain unresolved, you are well within your rights to report the co-op to the FBI and to US Customs and Border Patrol (look for the button that says “Trade Violations”).
Other sites with helpful information: