Ringing in the New Year right the FTC has announced a new enforcement policy statement designed to put retailers who import textile products on the same footing as those who source textiles domestically or from US importers.
The Textile, Wool and Fur Labeling Acts require that garments be labeled with the fiber content, country of origin if imported and other requirements. The Acts allow for retailers to receive in good faith continuing or separate guarantees from manufacturers assuring that the products are correctly labeled or promoted. And such guarantees give the retailers a safe harbor from liability. Now the FTC has said it will not enforce against a retailer that directly imports such products unless they “knew or should have known” that the products were incorrectly labeled or promoted. There are some limits — a retailer will still be liable for products it markets as private label. Also if the retailer embellishes or misrepresents information provided by the manufacturer in its advertising, liability will also attach. Of course, retailers may still want to obtain some type of written assurance from foreign suppliers, both for contractual purposes and also for use in potentially deflecting any argument that they “should have known” that the product was improperly labeled or marketed.
These acts are not subject to frequent enforcement but they do subject retailers to significant and expensive compliance obligations. This policy statement is a meaningful step forward to a recognition of the global marketplace.