Swallowing the magnets is a big deal. As they transit your system, they can easily find themselves on either side of a fold of tissue, whereupon they lock together, gradually kill the tissue, leak gut bacteria into the bloodstream and create sepsis.
On the other hand, if you swallow a nail, there is apparently a very good chance that your doctor will just tell you to go home and look for it in your poop. This according to a journal article I found last time the story came up.
Worse still, the risks are deceptive. As a parent, you would no doubt freak out completely if you discovered your toddler ate a nail. I know I'd be at the emergency room minutes later. On the other hand, parents are routinely told by their doctors to wait and watch the poop when other innocuous round objects are swallowed. It is very easy to see how parents could make the wrong call about the magnets and wind up with gravely ill children as a result.
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More things you might want to know about the CPSC complaint:
* Despite warnings, there've been numerous continuous incidents of kids needing surgery after ingesting the magnets.
* The magnets are marketed to kids 14 years and up; there are apparently lots of reports of teenagers using the magnets to hold jewelry for e.g. fake lip piercings.
* When you sell tiny rare earth magnets to teenagers, it is awfully hard to ensure that those magnets don't end up in the GI tracts of little kids that share a house with those teenagers.
* Warning labels for this suck because the product practically demands to be taken out of packaging; once you assemble a structure with them, it's not like you break them back up and put them in a box.
* Little kids love these things, because they're shiny, they click, and they move in unexpected ways.
The CPSC wants the death penalty for this product. I'm not there with them, but I see where they're coming from.