Makers of handcrafted toys experienced a sales bump during last year's lead-paint scare -- when lax oversight from Chinese factories forced Mattel (MAT) to remove over 19 million items from shelves -- but a new safety ruling by the Consumer Product Safety Commission (CPSC) could force smaller toymakers to raise prices or go out of business.

A federal regulation under the Consumer Product Safety Improvement Act -- which requires manufacturers to have products checked for lead paint by an outside firm -- goes into effect this week.

The ruling was praised by concerned parents and smaller toymakers that have ostensibly always used safer materials. Then they discovered they had a lot to lose.

According to the new regulation, manufacturers of toys will be on the hook up to $4000 for each product for costs related to testing for hazardous materials. Viable for a multinational like Mattel, certainly, but extremely prohibitive for a family-run or independent company - especially in an already sluggish economy.

In response, nearly 100 toy manufacturers united to form the Handmade Toy Alliance, and have submitted a plea to Congress and the CPSC to reconsider the testing fees for manufacturers with a track record of using safe materials.

But the move will face stiff competition on Capitol Hill. A spokesperson for Congressman Bobby Rush -- a chief supporter of the bill -- says standards aren't likely to be changed.

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