This month the National Toxicology Program added formaldehyde as a 'known carcinogen' in their 12th Report on Carcinogens. The official report here.
Interestingly, Canada declared it a toxic substance back in 1999, and the International Agency for Research on Cancer (IARC) declared it a known carcinogen in 2006. (Clearly we in the US must enjoy a different or less toxic variety of formaldehyde than our North American neighbors and the rest of the world, as it took a decade for us to reach the same conclusions.)
Here's a NY Times article about Brazilian blowouts from 2007. Although the Times does mention the risks and refers to formaldehyde as carcinogenic, they also helpfully provide two links to help the reader locate salons that offer the treatment, and basically provide gushing testimonial to how liberating and revolutionary it is (and is it weird to mention that there appears to be an undercurrent of marketing to Jewish women in this article?--editors' note: the writer of this post is herself Jewish and is thus allowed to make this somewhat spurious leap).
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