The Federal Trade Commission recently announced a new enforcement policy statement regarding the requirements for a guaranty under the Textile, Wool, and Fur Acts (“the Acts”). The Acts permit sellers of those products to obtain a guaranty from the product manufacturer that states that the product is not mislabeled or falsely or deceptively advertised. The Acts require that the party providing the guaranty must reside in the United States, a requirement put in place before overseas manufacturing was the norm for textile, wool and fur products.
The enforcement policy statement attempts to address this gap between the law and modern retailing reality by creating a defense for retailers who rely on vendor representations regarding product content, but are unable to obtain a valid guaranty because the vendor is overseas. In such cases, the Commission will not initiate enforcement where the retailer relied on the overseas vendor in good faith and did not embellish or misrepresent the vendor’s claims. Where the retailer is the manufacturer, however, as is the case with private label production, the Commission will still hold the retailer accountable to ensure that the items are properly labeled and advertised.
This change in enforcement policy is important for manufacturers and retailers. Manufacturers should be sure that their textile, wool, and fur products are properly labeled because retailers may increase their reliance on these statements. Retailers should examine their guaranty practices as well as their copy creation processes to determine whether advertising copy matches vendor-provided information to be prepared to take advantage of the “vendor defense” if needed in the future.
This post was written by Kristi Wolff and Christie Grymes Thompson.