Department store retailer Macy's Inc has been fined $750,000 for continuing to sell children's sweatshirts, sweaters and jackets with drawstrings at the neck after a recall had been issued on the products.

Drawstrings pose a strangulation hazard to children that can result in serious injury or death, and federal law requires manufacturers, distributors and retailers to tell the US Consumer Product Safety Commission (CPSC) if any items pose such a risk.

The garments in question were sold by Macy's and Macy's-owned stores, including Bloomingdale's, and Robinsons-May, between 2006 and 2010. They included lines from Quiksilver, Jerry Leigh of California, Macy's Merchandising Group and VF Contemporary Brands.

CPSC staff allege that Macy's knowingly sold some garments after a recall had been negotiated, which is illegal under the Consumer Product Safety Improvement Act of 2008.

Even though it has agreed to the settlement, Macy's denies claims that it knowingly violated the law.

Earlier this month, the CPSC set a new federal safety rule for drawstrings in children's outerwear, formalising long-standing voluntary guidelines into a mandatory standard.

The new rules apply to children's upper outerwear in sizes 2T through 12, with neck or hood drawstrings, and children's upper outerwear in sizes 2T through 16, with certain waist or bottom drawstrings.