Over the past few days I have received numerous emails and phone calls from panicked customers who are reading about this retzuah controversy on the Internet. I really think this whole thing is overrated. Here's why:
1) These retzuos are still mehudar according to many poskim such as Rav Moshe S. Klien.
2) It's not like the guy did something deliberately wrong to be machte es horabim, he simply made an honest error and did not choose the correct manufacturing procedure.
If people are looking for scandals in Stam, then in my opinion, the following are far more scandalous:
1) Many mezuzos and tefillin sold in Judaica shops around the world, many owned and run by by frum Yidden, are not written by sofrim with ksav kaballah. Based on my own research and experience, more than 50% of sofrim working in the "conveyor belt" safrus industry do not have ksav kaballah!
2) Many magihim operating both in Israel and the US do not have kaballa for "hagaha". Like in any industry, you need to be certified by a greater authority before you can practice. Could you imagine if you found out that your doctor did not have a medical license or did not graduate medical school?!? (What a scandal that would be, I think he would go to jail for that!). Why should the Stam industry be any different? We are also playing with people's lives (both ruchniyos and gashmiyos) !
3) The el cheapo gassos batim with the "hologram hechsher". I stopped buying them years ago, it is far more halachically superior as well as cheaper to use pshutim mehudarim than these batim. Of the last batch I received from a wholesaler in Benai Braq, The vast majority did not have the charitzim in the correct place. The few that did have good charitzim had other problems such as ribuah being way off. I understand that the hechsher is given until the painting only so the mashgiach / rav hamachshir cannot be responsible for possul charitzim mezuyafim. However most people do not read the fine print on the hechsher and these batim are sold complete with parshiyos all over the world (including Australia) to the unsuspecting public.
One final note:
Fraud and unscrupulous retailers have plagued the Stam industry for years. However I am not talking about the tourist shops and wider secular Jewish community. The three points above pertain to the "haimishe/ frum Stam industry and involve haimishe / frum sofrim/sochrim and retailers.