Wal-Mart, Burlington Coat Factory, Bugle Boy, Delia's and others Settle Charges of Violating Textile, Wool Acts In On-Line Catalogs

In an effort to ensure that required country-of-origin disclosures for textile products are correctly made, the Federal Trade Commission today announced settlements with eight manufacturers or retailers of clothing and other textile products. Wal-Mart Stores, Inc., Burlington Coat Factory Warehouse Corp., Delia's Inc., Woolrich, Inc., Gottschalks, Inc., and Bugle Boy Industries, Inc., have agreed to settle FTC allegations that they violated the Textile Fiber Products Identification Act and Commission rules under the Act by failing to make required origin disclosures for textile products sold via Internet catalogs. In some of these cases, the FTC complaints also allege violations of the Wool Products Labeling Act and Commission rules under that Act. Similarly, Abercrombie & Fitch has agreed to settle FTC allegations that it violated the Textile and Wool Acts and rules by failing to make the required origin disclosures in its print catalogs. The FTC also has accepted a proposed agreement with Design Zone, Inc., settling allegations that the company violated the labeling requirements of the Textile Act by removing foreign country-of-origin labels from garments it manufactured and replacing them with A Made in USA labels.

The Textile and Wool Acts and rules require manufacturers and marketers of covered products to mark each product with the generic name and percentage of each fiber present, the name or registered identification number (RN) of the manufacturer or another seller in the chain of distribution, and the country of manufacture or processing. The Textile and Wool Acts make it unlawful to sell, offer for sale, or advertise misbranded textile or wool products. In addition, these statutes require that mail order catalogs and other mail order promotional materials clearly and conspicuously state that each textile or wool item advertised or offered for sale was either imported, made in the USA, or a combination of both. In February 1998, the Commission adopted various streamlining amendments to the Textile and Wool Rules. In addition, it revised the definitions of Amail order catalog and Amail order promotional material to include materials disseminated electronically via the Internet.

Six months after the amendments were announced, the FTC conducted an Internet textile surf to determine whether on-line sellers of textile products were complying with the origin disclosure requirements. The FTC reviewed more than 200 sites offering textile or wool products for direct sale to consumers. The sites reviewed included clothing retailers (some of which also are manufacturers), sellers of recreational equipment, including military surplus stores, and specialty sellers of promotional items such as T-shirts and baseball caps.

AAs more consumers turn to the convenience of online shopping, it is important that retailers who market on the Internet comply with the law, said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. AWhether a textile product is made in the United States or imported must be clearly disclosed in catalogs offered either in print or on the Internet.

Wal-Mart Stores, Inc., one of the country's leading retailers, is based in Bentonville, Arkansas. Burlington Coat Factory Warehouse Corporation, with headquarters in Burlington, New Jersey, operates more than 230 stores in 42 states. The company also owns Luxury Linens, Baby Depot, Decelle, Cohoes Fashion, and Totally 4 Kids. Delia's Inc., based in New York City, is a catalog company, in business since 1993, marketing clothing to teenage girls. Recently, Delia's has acquired other catalog businesses selling clothing and other products for children and adolescent girls. Woolrich, Inc., began business as a woolen mill in 1830, and moved to its present location in Woolrich, Pennsylvania, in 1845. It operates 19 outlet stores selling discontinued styles, and seven stores selling the full line of Woolrich products. Woolrich also licenses other retailers to operate Woolrich shops within their stores. Gottschalks, Inc., is a regional department store chain, founded in 1904, with headquarters in Fresno, California. Gottschalks operates 36 department stores and 24 women's large-size apparel specialty stores in California, Washington, Oregon, and Nevada. Bugle Boy Industries, Inc., based in Simi Valley, California, is a manufacturer and retailer of primarily men's and boys' clothing. Abercrombie & Fitch, Inc., is a major retail chain with headquarters in Reynoldsburg, Ohio.

While Abercrombie does not offer an online shopping service, it does market its clothing by means of a print catalog.

The FTC charged Wal-Mart, Burlington Coat Factory, Delia's, Woolrich, Gottschalks, and Bugle Boy with violations of the Textile Act and rules based on failure to provide origin information about products offered for sale by means of an online shopping service. All of the companies, except Bugle Boy, also were charged with violations of the Wool Act and rules. In addition, the FTC's complaint against Delia's alleged failure to provide the required origin information in its print catalogs. Abercrombie & Fitch was charged with violation of the Textile and Wool Acts and rules for failure to make the required disclosures in its print catalogs. The proposed settlements with these companies would prohibit future violations. In addition, they contain recordkeeping and reporting requirements designed to assist the FTC in monitoring compliance with the terms of the orders.

Design Zone, Inc., a women's apparel manufacturer and seller of sportswear, including T-shirts, is based in Los Angeles, California. The FTC's complaint alleges that the company removed A Made in China labels from certain T-shirts and replaced them with A Made in USA labels, in violation of the Textile Act and Rules. In some cases, according to the FTC, A Made in USA labels were affixed to T-shirts without removal of the foreign country-of-origin label. The proposed settlement would require Design Zone to comply with the Textile Act and regulations in the future, and would prohibit misrepresentations regarding the country-of-origin of any textile product.

The Commission votes to accept seven of the proposed consent agreement for public comment were 4-0. The Commission vote to accept the Wal-Mart proposed consent agreements for public comment was 3-0, with Commissioner Sheila Anthony recused. Announcements regarding the proposed consent agreements will be published in the Federal Register shortly. The agreements will be subject to public comment for 60 days, after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: Consent agreements are for settlement purposes only and do not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaints, proposed consent agreements and analyses to assist the public in commenting are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627.

Information about how to comply with the Textile and Wool Acts and rules is available in a new FTC business guide: Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts. The guide also is available on the FTC's web site. To obtain a copy, or to hear recorded information about these legal requirements, call 202-326-3553.

To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(Wal-Mart Stores -- File No. 992 3007)
(Burlington Coat -- File No. 992 3002)
(Delia=s -- File No. 992 3008)
(Woolrich -- File No. 992 3003)
(Gottschalks -- File No. 992 3004)
(Bugle Boy -- File No. 992 3009)
(Abercrombie & Fitch -- File No. 992 3039)
(Design Zone -- File No. 982 3257)