Bloomberg News

Amazon.Com, Macy’s, Sears Settle FTC Mislabelling Claims

January 03, 2013

Amazon.com Inc. (AMZN:US), Macy’s Inc. and Sears Holding Corp. (SHLD:US) agreed to settle U.S. government lawsuits over claims they misled consumers by selling rayon fabrics labeled as made from bamboo fiber.

The retailers, without admitting or denying the commission’s allegations, agreed to make payments to the government and to accept compliance monitoring and reporting, according to proposed settlements filed today in federal court in Washington. Leon Max Inc. agreed to settle a similar suit.

The companies sold products such as Armani underwear and baby blankets as containing bamboo when none of the plant’s unaltered fiber was woven into the fabric, the agency alleged in complaints filed ahead of the proposed settlement agreements.

“Consumers pay a premium for products labeled and advertised as being made from bamboo because they believe that the product is made from a renewable resource and is good for the environment,” Stuart Delery, who heads the Justice Department’s civil division, said in an e-mailed statement. “Consumers expect that they will get what they pay for; here, they didn’t.”

The cases were referred to the department by the Federal Trade Commission, which investigates violations of the Textile Fiber Products Identification Act.

The settlements, which need approval by a federal judge, were filed almost three years after the commission sent letters to 78 retailers warning them to stop labeling and advertising rayon products as bamboo.

Amazon, Macy’s and Sears were among the companies that received the letter, according to the commission.

Sears agreed to pay a $475,000 penalty; Amazon.com, $455,000; Macy’s, $250,000; and Leon Max, $80,000.

Identification Act

“We cooperated with the FTC in reaching this settlement in lieu of pursuing further litigation,” Howard Riefs, a spokesman for Sears, said in an e-mailed statement. “We continue to take these regulations seriously.”

A message left with Amazon.com’s media relations department seeking comment on the case wasn’t answered. Jim Sluzewski, a spokesman for Macy’s, declined to comment on the settlement.

The cases are U.S. v. Amazon.com, 13-cv-00002; U.S. v. Macy’s Inc., (M:US) 13-cv-00004; U.S. v. Sears, Roebuck and Co., 13-cv- 00005; and U.S. v. Leon Max Inc., 13-cv-00003, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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Companies Mentioned

  • AMZN
    (Amazon.com Inc)
    • $322.44 USD
    • 0.62
    • 0.19%
  • SHLD
    (Sears Holdings Corp)
    • $25.23 USD
    • -0.75
    • -2.97%
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