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Fri May 29 2015 15:33:55

More Regulation Could Impact Etsy Sellers, Small Businesses

By: Ina Steiner

Sponsored Link

Online sellers of handmade soap, lotions and cosmetics are concerned they could be wiped out if a new Senate bill becomes law.

The Personal Care Products Safety Act would require cosmetics manufacturers to register with the Food and Drug Administration, file reports listing the ingredients in their products, and pay an annual fee to help cover the cost of the enhanced oversight, among other measures. (You can read more about the regulation in today's EcommerceBytes Newsflash.)

Soap? Is soap even considered a cosmetic?

The FDA has a long explanation about whether it considers soap to be a cosmetic or a drug - in which case its agency oversees it - or simply "soap," in which case the Consumer Product Safety Commission (CPSC) regulates it.

"Examples of cosmetic uses (of soap) include making the user more attractive, by acting as a deodorant, imparting fragrance to the user, or moisturizing the skin."

"Small businesses" are supposedly exempt, but again, you might ask, what is a small business? 

According to the bill's sponsor, there are several protections for small businesses, including a complete exemption from the registration, reporting and user fees for cosmetics makers with less than $100,000 in gross annual sales. Even assuming a generous profit margin, that's an extremely low standard.

As this article about online sales tax reported, the Senate has already defined small business as those with less than $1 million in annual remote sales - sales outside their state, and eBay defines small businesses as those with $10 million in annual remote sales.

The government's Small Business Administration defines small businesses in manufacturing industries to be anywhere from 500 employees to 1,500 employees.

In discussing the bill, a law firm noted that the requirements for adverse event reporting exceed requirements applicable to non-prescription drugs!

And, the firm said, "Presumably to facilitate contacting the cosmetic company, cosmetic labels must include a domestic phone number or electronic contact information. A domestic address is not an option."

The Handmade Cosmetic Alliance, which represents over 300,000 small handmade cosmetic companies throughout the U.S., opposes the bill. It notes that the industry is comprised of largely women-owned and operated businesses (95%), employing an average of between 1 to 3 employees.

Surprisingly Etsy had no comment when contacted for comment by EcommerceBytes.



Comments (19) | Permalink

Readers Comments

Perminate Link for More Regulation Could Impact Etsy Sellers, Small Businesses   More Regulation Could Impact Etsy Sellers, Small Businesses

by: JustTheFacts This user has validated their user name.

Fri May 29 17:29:42 2015

Leave it to Frankenstien to create a bill designed to HURT smaller business in order to help BIG business.

Never fall for the CREEPING bills either, those are designed to lull the victims to their deaths.

Go look at all of Frankenstiens bills and you will see that they are ALWAYS in favor of BIG business at the expense of little business and more government control.

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This user has validated their user name. by: iheartjacksparrow

Fri May 29 20:06:03 2015

Just when you think laws can't get any crazier, they do. The government has to protect us from soap now? If the manufacturers have to pay an annual fee, say hello to higher soap prices. Living in California, when the state runs out of water, I won't have to worry about buying soap since taking showers will be a thing of the past.

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by: ajeweler This user has validated their user name.

Sat May 30 08:46:05 2015

oh heck I can see it now headlines read "seller arrested for selling soap without prescription" mansano
now that company can alter GMO foods and the corporate rules again. good gosh what next?? socks regulated removals of pillow tags?

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by: JulieandBlu This user has validated their user name.

Sat May 30 10:55:38 2015

Obviously, it is not about consumer protection or there would be no exemption cap. If it is poison at $100,001.00, then it is poison at 0.01 Say what it really is; big businesses making sure that the individuals in this country make no competitive product and that the sponsored senators act to protect them from Betsy Lou making a bar of soap in her kitchen that far out performs their products.  

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by: ignatz This user has validated their user name.

Sat May 30 14:02:53 2015

So gun-grabber Feinstein is now soap-grabber Feinstein?

Aha, here's the key:

"Supporters of the bill, which enjoys the backing of several large consumer goods manufacturers like Procter & Gamble and Unilever"

So it *should* be called the "P&G/Unilever Profit Protection Act."



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This user has validated their user name. by: askalice59

Sat May 30 19:34:45 2015

There are some really naive sellers on Etsy. They should be the ones complaining the loudest about this and some of them think it's probably a good thing. smh

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by: angryllama This user has validated their user name.

Mon Jun 1 04:55:41 2015

Why are ALL the comments FIXATING on SOAP ?  The topic of the action is "Online sellers of handmade soap, lotions and cosmetics".  Has nobody here ever READ "The Jungle" ?  The Pure Food and Drug act was largely driven by this expose of what was going on in the meat packing industry 100 years ago.  Are all sellers of home made cosmetics lotions and soap fully informed as to the RISKS and HAZARDS of all sort of potential ingredients?  I promise you they are NOT. Coloring Dyes that are BANNED from use in food, cosmetics, drugs are perfectly LEGAL to own and use so long as NOT used for those purposes. What would stop an uninformed or UNCARING garage operation from  using banned items in their products?  Think ALLERGIES. What would currently STOP a well meaning homemade seller from using PEANUT OIL in their lotions cosmetics or soaps?

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by: sundance This user has validated their user name.

Mon Jun 1 05:56:40 2015

Well, of course Etsy didn't comment.  They're too busy playing their usual Ostrich role hoping it goes away.

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by: Flying Childers This user has validated their user name.

Mon Jun 1 08:33:34 2015

This is yet another example of Big Brother overreach from our Nanny State government. They already tell us what kind of light bulbs we have to have, how much water we need to flush our toilets, what kind of foods we can and can't eat- why would they feel any differently about soap?
FrankenFeinstein is part of the socialist/ lib/dem cabal that has destroyed California and NY and they never rest until they get MORE power and MORE of our money. Since Chad became a part of the Obama administration, he will never say anything to question the party line. In fact, this is why Etsy is the way it is- because it is governed by Lib/ Dems like Chad & Co. who are really socialists. Just look at their Manifesto- like BHO, Chad wants to "fundamentally change" American commerce by destroying the very people who made Etsy what it is today.
He's too clever by far.

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by: Chicago48 This user has validated their user name.

Mon Jun 1 08:55:26 2015

Actually it makes sense.  I go to a lot of flea marketplaces and there are bunches of home-made cosmetic sellers.  I normally buy something, and haven't had a reaction.  But what if I did?  What's my recourse?

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by: moonmyst This user has validated their user name.

Mon Jun 1 09:12:54 2015

I agree with Chicago48 and am all for the passing of this bill.  I cannot tell you how many times I have purchased home made food and cosmetics that have made me sick or injured me.  There's nothing wrong with requiring these ''artisans'' to register or become certified.  Otherwise, consumers have absolutely no recourse whatsoever.  Maybe others don't care what they put on their bodies or in their mouths, but I'm not one of those people.  

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This user has validated their user name. by: Basset

Mon Jun 1 09:57:50 2015


I don't mind lack of regulation when it is for personal consumption: I have been known to cook up various potions like dog ear cleaner, facial toner, hair styling aids, etc...   The internet has a recipe for just about anything and most ingredients are readily available.  

However, I would NOT sell anything I concoct  for public consumption.  I am not an expert, liability is a way of life in USA and besides, people can make their own darn stuff.


Although I would have done so in the past,  I no longer buy ''homemade'' cosmetics, soap, brownie mix, etc.. from strangers.  

Too many tiny blurbs buried in the news of intentional and unintentional things that happen: Bad bacteria, allergies, and jackasses who think it is cute to add their own ''biologicals''  to what they are making then get caught on film - things like that...  

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by: I Must be Crazy This user has validated their user name.

Mon Jun 1 11:03:59 2015

This is the same tactic used by agribusiness (Monsanto comes to mind)to squeeze out smaller, local growers of produce and livestock. All with the blessing and support of the US Government. It has been a very successful campaign so why not for cosmetics.  

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by: I Must be Crazy This user has validated their user name.

Mon Jun 1 11:06:03 2015

Wasn't finished...

Just another way to stifle competition and choice. Hope it doesn't pass.

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by: JLynnPro This user has validated their user name.

Mon Jun 1 12:42:36 2015

"Supporters of the bill, which enjoys the backing of several large consumer goods manufacturers like Procter & Gamble and Unilever, say that new rules are needed to keep harmful chemicals out of cosmetics products, which are regulated under rules dating back more than 70 years. Several consumer advocacy groups have also indicated support of the legislation."

Oh, this is RICH, considering that the products made by P&G and companies like them are nothing BUT "harmful chemcials!"  It's just another attempt by Big Chem, Big Pharma, etc to push the little guy out.

It's getting really old!

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This user has validated their user name. by: Tula

Mon Jun 1 13:57:54 2015

I'm of two minds on this one. I do think some level of regulation should be implemented, but this bill goes too far. Requirements to report ingredients sounds quite reasonable, since those with allergies or sensitivities need to know what's in a product. If there were simple forms that only needed to be fined annually or quarterly, at most, I think most small businesses could handle it. This bill, however, looks like it's trying to apply big company regulation to small entities who don't have the resources to manage that level of regulatory compliance.

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by: fashionista This user has validated their user name.

Mon Jun 1 20:27:28 2015

I agree with Basset & Tula, it's pretty tricky.  These things have to be manufactured in sterile conditions, specially cosmetics.
I would not venture to sell anything like that.

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by: rover This user has validated their user name.

Tue Jun 2 08:33:32 2015

When the EU brought in a crazy law requiring businesses of all sizes - including micro businesses - to collect VAT tax for digital downloads many US sellers on Etsy were less than sympathetic. All they could think about was protecting their own interests by urging ETSY to enable them to block sales to EU buyers. There were also some very anti EU and hostile postings in the ETSY forums which implied that individual EU sellers were somehow at fault or ''greedy''. Many critics failed entirely to place the blame with that most corrupt of organizations - the EU itself. The legislation was a clumsy tactic intended to prevent large companies from evading taxation. However it applied equally to the smallest companies and offerered no lower financial limit to exclude them.

Now the shoe is on the other foot. Small US ''mom and pop'' companies may be affected by a similarly clumsy and inept piece of legislation which had no lower financial limit.

Perminate Link for More Regulation Could Impact Etsy Sellers, Small Businesses   More Regulation Could Impact Etsy Sellers, Small Businesses

by: Gina This user has validated their user name.

Tue Jun 2 13:26:17 2015

nothing new there!  I got regulated right out of my handmade business...one government agency after another, one private industry 'rules' after another......
The constant aggrivation wasn't worth the tiny profit I wasn't making any longer!



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