100% Bamboo: Why textile sellers need to care about product labeling and the FTC

Read about the four national retailers agree pay penalties totaling 126 million

“The companies have agreed to pay the following civil penalties to settle the FTC’s charges: Sears ($475,000), Amazon ($455,000), Macy’s ($250,000), and Leon Max ($80,000).  The penalties reflect how long the companies continued to sell mislabeled textiles after receiving an FTC warning letter in early 2010, as well as the amount of products sold.  Each company also will be required to ensure that the labels and ads for bamboo textiles they sell accurately indicate their fiber content.

“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.”

What does this mean for your small textile business? The FTC (Federal Trade Commission) has a very helpful guide for labeling your textile products. However, this is a lengthy guidance document, and even if you learn how to properly label your product, how do you know that what your supplier is telling you is 100% cotton is actually 100% cotton? There are a few areas that you should pay attention to when working with textile products in the US (Canada’s rules are relatively similar, but with notable differences): what the permitted fiber names are; what the tolerances are from the labeled percentages; important exemptions; enforcement and penalties; and ongoing validation in your supply chain.

Even large companies can get into very hot water for mislabeling issues. The best approach to ensuring compliance for your textile program is have a program to evaluate your suppliers and ensure they have raw materials verification (and a needle policy, but that’s a different issue), test the prototypes, perform during production and finished goods inspections, and do regular validation testing.To ensure that your products are correctly labeled, you need to both prepare before the shipment and provide a label mockup to the supplier (or provide them with a labeling expectation guide) but also need to validate that those are truly the fibers present. For example, if your fabric is labeled 90% cotton, 10% bamboo, you not only have to change the labeling to read 90% cotton, 10% rayon from bamboo, but you also need to send the fabrics to a 3rd party testing lab to be validated and tested for flammability – products coming from Asia and the Caribbean sometimes are inaccurate as to their fiber content, because often rayon or polyester is cheaper than cotton and benefit the raw materials supplier to use a little extra of the cheaper thread, while products coming from Europe sometimes fail to meet mandatory flammability safety testing, as this testing is not required in Europe.

But what if you don’t have the funds to perform this best practice compliance evaluation program? At this point, you can choose whether to focus your attention on supplier based validation or on product based evaluation. If you qualify your suppliers and expect them to evaluate the goods appropriately, you may end up working with suppliers who charge a little more, but may balance out in terms of the bottom line with lower testing and inspections costs. However, some companies or employees are incentivized based on top-line profit. In that case, a focus on product evaluation and testing/inspections would be about as effective as a supplier evaluation only, but typically is counted as opex, and falls in costs below top line revenue (below COGS). Or, your customers may mandate certain testing be done, and that takes up your compliance budget so that supplier evaluation is not in scope.

Ultimately, the approach you take to mitigate risk is all about the risk your company is willing to take, and how you choose to spend your funds. I can help you determine what your risk strategy should be based on your company’s values, branding, and target market, and then recommend, implement, and maintain an appropriate compliance strategy based on your budget.

While this post is most focused on the FTC, considerations for complying with the CPSC should also feed into your compliance approach for textiles. For example, at a bare minimum, flammability testing and fiber content testing must be evaluated, because all manufacturers, private labelers, and importers must issue a certificate of conformity (per CPSIA, the Consumer Product Safety Improvement Act enforced by the CPSC) for wearing apparel in the US.

About the Author
Rachel Johnson Greer is a global business strategist who specializes in helping entrepreneurs increase their internet product sales, curate their brand image online and avoid catastrophic legal threats. After getting her MBA in international business at Seattle University, she spent nearly a decade at Amazon working in product development. Since then, Rachel has founded companies that reached both multi-six figure and multi-seven figure growth in under three years.

As a business coach, she supports clients in everything from international product expansion to 4x-ing their sales through online retailers. Rachel is frequently sought out by the media and has appeared on the Today Show, CNBC, Business Insider, The Wall Street Journal and Bloomberg. When she’s not working with clients, she’s scaring friends at parties with stories about the most problematic online products she’s found in their homes. She lives in Seattle, Washington.

Leave a Comment

Sign up for our Newsletter!

Get updates, new blog posts, special offers, and upcoming show information in your inbox.