Toymakers Eye Possible New Toxin

Lead may have hounded the toy industry this year. But at the New York Toy Fair, that's not the toxin they're most concerned about - it's phthlatates, found in everything from shampoos and lotions to plastic playthings, dating back decades.

Studies linking phthalates to reproductive birth defects and cancer in lab animals have led to partial bans in California and the European Union, which declared, "Toxic chemicals have no place in children's toys."

The science is far from conclusive, but Robert Von Goeben, co-founder of green toys, said, "When in doubt, don't put 'em in, you know?"

Now, new toymakers like Green Toys and KidsGive are trying to reinvent toys without the questionable chemicals, reports CBS News correspondent Nancy Cordes.

It's a tougher process for established brands like Step2, whose president and CEO Scott Levin said, "We saw the writing on the wall."

The Ohio-based company decided to stop using phthalates in September.

"One of the challenges is certainly the cost," Levin said. "I mean, take something like this lamb, it could cost us 25 cents. It could be a third or a half less if we use phthalates."

Phthalates give toys their bend. Without them, a rubber duckie is less squeezeable - but it's also more marketable, such as this toy that says "Phthalate Free" on the sticker.

Retail giant Toys 'R' Us just announced it wants to stop selling children's products that contain phthalates, or nickel-cadmium batteries, or PVC vinyl - a sign that the industry is taking cues from consumer concerns about chemicals like phthalates, even if U.S. government regulators don't deem them harmful.

"Obviously, if there's new evidence that's presented to us, we'll take another look at it," said Nancy Nord, acting chairwoman, Consumer Products Safety Commission.

But after a disappointing sales year, toymakers are well aware it's not just the government they need to satisfy - it's also cautious customers.