Macy's, Sears, Amazon, Max Studio Fined for 'Bamboozling' Customers

Jan. 5, 2013 — -- Four national retailers have agreed to pay $1.26 million in penalties for falsely labeling clothing and textiles as made of bamboo, when they were actually made of rayon, a synthetic material.

The Federal Trade Commission announced this week that Amazon.com, Leon Max, Inc., Macy's, and Sears, Roebuck and Co. ignored warning letters the commission sent to companies in early 2010.

Accordingly, the four companies agreed to pay penalties totaling $1.26 million to settle charges that they violated the Textile Products Identification Act and the FTC's "Textile Rules" by mislabeling and advertising products as made of bamboo.

The FTC warned that unless a product is made directly with bamboo fiber, often called "mechanically processed bamboo," it can't be called bamboo.

In a guideline issued to companies, the FTC refers to the mislabeling practice as "bamboozling" customers.

Sears, which is the parent company of Kmart, agreed to pay $450,000. Amazon is paying $455,000 while Macy's will pay $250,000, and Leon Max, which produces Max Studio clothing, is paying $80,000.

The FTC said the varying penalties reflect how long the companies continued to sell mislabeled textiles after receiving the warning letter and the number of products sold.

"We cooperated with the FTC in reaching this settlement in lieu of pursuing further litigation," said Sears Holdings Corp. spokesman Howard Riefs in a statement. "We continue to take these regulations seriously."

A spokesman for Macy's declined to comment. Amazon and Max Studio did not return requests for comment.

The FTC said the companies will be required to ensure the labels and ads for bamboo textiles they sell "accurately indicate their fiber content."

For example, the FTC said Macy's allegedly used the terms "bamboo" and "bamboo fiber" on textile labels.

So-called bamboo textiles are often marketed as environmentally friendly, but the process for manufacturing rayon, even when it is made from bamboo, "is far from a 'green' one," the FTC said.

Rayon is sometimes made using "environmentally toxic chemicals in a process that emits hazardous pollutants into the air," the FTC said.

"While different plants, including bamboo, can be used as a source material to create rayon, there's no trace of the original plant in the finished rayon product," the FTC said in a guide for marketers.