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FTC Fines Stores $1.6M Over Bamboo Flap

Macy's, Sears, Amazon and Leon Max allegedly falsely labeled rayon products as made of bamboo.

WASHINGTON — The Federal Trade Commission has fined four retailers — Macy’s Inc., Sears Roebuck and Co., Amazon Inc. and Leon Max Inc. — a combined $1.26 million for allegedly falsely labeling rayon products as made of bamboo.

This story first appeared in the January 7, 2013 issue of WWD.  Subscribe Today.

The federal agency said the retail organizations ignored warning letters for two years.

“When attempting to appeal to environmentally conscious consumers, companies need to ensure they don’t cross the line into misleading labeling and advertising,” said Charles Harwood, acting director of the FTC’s Bureau of Consumer Protection. “If a textile is made of rayon, sellers need to say that, even if bamboo was used somewhere along the line in the production process.”

The agency said the four retailers violated the Textile Products Identification Act and the FTC’s textile rules by labeling and advertising products sold in stores and online as made of bamboo when they were made of rayon.

Sears, including its Kmart subsidiaries, agreed to pay $475,000 to settle the charges, while Amazon agreed to pay $455,000, Macy’s $250,000 and Leon Max $80,000.

The FTC cited specific examples for each retailer. Leon Max, doing business as Max Studio, sold a “silk and bamboo broadcloth shirred shell” it allegedly claimed was made of “delicate and eco-friendly bamboo and silk fabric” comprised of 65 percent bamboo and 35 percent silk, as well as a “Football Tee” that it claimed was 50 percent bamboo and 50 percent cotton.

Macy’s allegedly advertised and sold products labeled as bamboo, using the term “bamboo” and “bamboo fiber” on labels, including a “contour campus pouch brief.” Sears and Amazon allegedly claimed that some sheet sets were made of “100 percent bamboo” or contained bamboo.

The agency first brought charges against companies allegedly selling rayon textiles labeled as bamboo in 2009 and settled with four other companies at that time. It then sent warning letters to 78 companies in January 2010 warning them to stop mislabeling rayon products as bamboo. That followed a ruling that year in which the FTC said the process required to turn bamboo into a soft textile, which requires extensive chemical processing, essentially turns the raw material into rayon, a man-made fiber.

“The rayon manufacturing process uses toxic chemicals and results in the emission of hazardous air pollutants,” the FTC said at the time. “And, despite the claims of ‘Pure Bamboo’ and ‘Bamboosa,’ the commission charges that these rayon products are not biodegradable because they will not break down in a reasonably short time after customary disposal. Most clothing and textiles are disposed of either by recycling or sending to a landfill. Neither method results in quick biodegradation.”

In a separate announcement, the FTC implemented a new enforcement policy under the Textile Fiber Products Identification Act, the Wool Products Labeling Act and the Fur Products Labeling Act that allows retailers to avoid liability for false advertising if they obtain a good faith “guaranty” from a U.S. supplier that certifies the products are not mislabeled, falsely invoiced or falsely advertised.

Retailers are not allowed to obtain a guaranty from a foreign supplier of textile, wool and fur products.

In addition, the FTC’s new enforcement policy clarifies that a company that imports from a foreign supplier and cannot obtain a good faith guaranty will only be liable if they “know or should have known of the violation and did not modify or embellish the claims of the supplier provided or market the product as private-label product.”