In-FUR-mation Update: New FTC Enforcement Policy for Retailers

by Sheppard Mullin Richter & Hampton LLP

Fur was a number one pick this winter season, as seen in magazine editorials, designer ads and fashion shows, showcasing its popularity in collections around the world. Whether jacket, purse, parka or boots, the Federal Trade Commission (“FTC”) mandates that all fur products within its jurisdiction comply with the labeling requirements under the Fur Products Labeling Act (the “Fur Act”). The Fur Act governs the manufacture, advertising, selling, importation, transportation and distribution of any fur product in the United States, ensuring that any such product is not misbranded or falsely or deceptively advertised or invoiced. It is important for retailers to be aware of how to comply with the Fur Act and to be up-to-date on the new enforcement policies released by the FTC relating to the Fur Act and its related rules, one of which was issued in January of this year.

In an effort to protect consumers from deception and curb unfair competition in the marketplace, the Fur Act prohibits any fur product in any state from being misbranded or falsely or deceptively advertised. A fur product is considered misbranded if the label does not state (1) the names of the animal that produced the fur (as set out in the FTC’s Fur Products Name Guide), (2) the name of the manufacturer, and (3) the name of the country of origin of any imported furs; and if the fur product (4) contains used fur, (5) contains bleached, dyed, or artificially colored fur, or (6) is composed in whole or in substantial part of paws, tails, bellies, or waste fur. As of March 18, 2011, the FTC mandates observation of such label requirements regardless of the product value, pursuant to the Truth in Fur Labeling Act of 2010, as amended. 

The Fur Act, as well as the Textile Fiber Products Identification Act (the “Textile Act”) and the Wool Products Labeling Act (the “Wool Act”), provide retailers with a method to avoid liability where retailers obtain a guaranty or continued guaranty in good faith from the applicable product’s manufacturer, certifying the manufacturer’s compliance with the provisions of the applicable statute; provided that the manufacturer resides in the United States. However, this safe harbor does not cover situations in which the product was directly imported from a manufacturer overseas.

Recognizing the importance of providing protection to domestic retailers that rely on foreign manufacturers’ guaranties, the FTC issued a new enforcement policy as of January 2013, which creates a defense for retailers who rely in good faith on foreign manufacturers’ representations regarding compliance with the Fur Act, Textile Act, and Wool Act. Pursuant to this new policy, the FTC will not initiate an enforcement action against a retailer in connection with the marketing or sale of a product, where the retailer: (1) cannot legally obtain a continuing or separate guaranty from the manufacturer, (2) does not embellish or misrepresent claims provided by the manufacturer, and (3) does not market the product as a private label product. However, it is important to note that the policy excludes retailers that knew or should have known the marketing or sale of the fur product would have violated any of the Acts, or any other applicable law, rule, or regulation.

Thus, the FTC’s new enforcement policy serves to alleviate some of the risk retailers face when selling products containing fur, particularly in light of the potentially large fines resulting from violations of the Fur Act. Moreover, it will allow for an increased reliance on manufacturers, whether domestic or foreign based, placing pressure on manufacturers to ensure that their fur (and textile and wool) products are properly labeled in compliance with applicable FTC statues and regulations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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