Tommy Hilfiger U.S.A., Inc. Agrees to Pay $300,000 Civil Penalty to Settle FTC Charges of Violating Care Labeling Rule

The Federal Trade Commission has negotiated the largest civil penalty awarded in a case alleging violations of the Care Labeling Rule as part of a settlement with New York City-based Tommy Hilfiger U.S.A., Inc. According to the FTC's complaint, Hilfiger, in some instances, sold garments with care labeling instructions that, when followed, resulted in significant color "bleeding" and fading of the garments. In addition to paying the $300,000 civil penalty, the company has agreed to place a toll-free number on its care labels so that consumers may contact the company directly with questions about cleaning or care of a particular garment.

The FTC's Care Labeling Rule, promulgated in December 1971, requires manufacturers and importers of textile wearing apparel to attach care labels to these items. These labels must state "what regular care is needed for the ordinary use of the product." The rule also requires that the manufacturer or importer possess, prior to sale, a reasonable basis for the care instructions, including any warnings.

According to the FTC's complaint, Hilfiger violated the rule when the company manufactured and sold garments with a washing instruction, that when followed, resulted in dye bleeding from one portion of the garment into another. The FTC also charged that Hilfiger violated the rule because it did not possess, prior to sale, a reasonable basis for this care instruction.

As part of the proposed settlement of these allegations, Hilfiger has agreed to pay a civil penalty in the amount of $300,000 and to comply with all provisions of the Care Labeling Rule in the future. The company also has agreed to include a customer satisfaction message and a toll-free telephone number on the care labels of its garments so that consumers may call with questions about care or cleaning of a garment.

The proposed settlement also contains recordkeeping and reporting requirements designed to assist the FTC in monitoring compliance with the terms of the settlement.

The complaint and proposed consent decree were filed in the U.S. District Court for the Southern District of New York, in New York City, today, by the Department of Justice at the request of the FTC. The consent decree is subject to court approval. The Commission vote to refer the complaint and proposed settlement to DOJ for filing was 4-0.

In a separate statement, Federal Trade Commissioner Mozelle Thompson noted that while he voted to support the settlement, he had concerns about the amount of the civil penalty. "While the $300,000 penalty is indeed significantly higher than the penalties we have obtained in prior Care Labeling Rule cases," Thompson said, "I am concerned that it may not provide sufficient deterrence to large profitable garment industry companies." Thompson cited the enormous popularity of the Tommy Hilfiger brand, especially with teenagers. "This popularity is reflected in over $840 million in sales in 1998," Thompson said. According to Thompson, the monetary injury to consumers "is especially egregious in cases like this one where the products are being heavily marketed and sold to young people who may not be able to effectively obtain redress for faulty goods." "While I am generally pleased that we are increasing the penalties we are obtaining in most care labeling and other consumer protection cases where appropriate, these penalties should be substantially higher in cases like this one where the volume of sales and the nature of the customer may warrant more effective relief," Thompson said.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.

Copies of the complaint and proposed consent decree, as well as information about the FTC's Care Labeling Rule, 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. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(Civil Action No.: 99 CIV. 1957)
(FTC File No.: 962 3073)