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Parents concerned about toy safety this holiday season can rest a little easier than last year. But if consumers want to shop with near-100 percent confidence, this holiday shopping season will fall short.

"You're a step ahead of the game if you don't assume that a toy is safe," said James Swartz, director of World Against Toys Causing Harm, Inc. (W.A.T.C.H.). Swartz recommends familiarizing yourself with toy hazards and watch for them while you shop.

Some of the hot toy trends for this year include electronic toys, environmentally friendly toys and those that encourage children to get more exercise. Some big names are having anniversaries this year, too; Barney the purple dinosaur is 20, and Legos turn 50. (Check out our slide show of the top 15 toys for 2008.)

More inspections, new laws and better funding

The 2007 recalls involved 25 million toys, including some of the most popular toy brands in the world such as Polly Pockets, Thomas the Tank Engine, Dora the Explorer, and Barbie play sets, among others.

By the summer of 2008, Congress passed and President Bush signed into law a tough new toy safety standard called the Consumer Product Safety Improvement Act. The law requires mandatory testing of toys and sets thresholds for lead and chemicals, such as phthalates, in toys and other children's products.

It also boosted the budget of the Consumer Product Safety Commission (CPSC), the federal agency tasked with monitoring the safety of household products. The agency now has more money, has added staff, and has ramped up inspections in both retail stores and ports.

This past year, cooperation increased between the U.S. and China, where many of the toys are made. "We had a big reduction this year in toy recalls," said Nychelle Fleming, a spokesperson for the CPSC. In 2007, there were 138 recalls, 97 of them lead-related. In 2008, there were 74 toy recalls, and 45 were lead related—nearly a 50 percent decline. (Keep in mind that the year's not over yet; that number could change.)

The CPSC's newly created Import Security Division now has staffers at nine U.S. ports and stopped 681 toy shipments in the last seven months. About 296 were denied entry due to safety violations, Fleming says.

"The commission believes we are looking harder, and actually finding [fewer] violations," she says.

Meanwhile, toy makers reacted to the threat that the sensational recalls represented to their business that's very much dependent on Chinese manufacturing. Industry organizations say they stepped up testing on their own.

Toy manufacturers have "a personal interest, moral interest and a vested interest in making sure their products are safe for the children who play with them," says Robert Herriott, director of international and regulatory affairs at the Toy Industry Association.

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