Statement of Commissioner Mozelle W. Thompson
The Commission recently entered into a consent decree with Tommy Hilfiger U.S.A., Inc. ("Tommy Hilfiger") to settle alleged violations of the Care Labeling Rule. Although I have voted to support this settlement because, based on Commission staff's investigation, there is ample reason to believe that Tommy Hilfiger has violated the Rule, the settlement nonetheless raises some concerns that I wish to discuss today.
The Tommy Hilfiger brand is extraordinarily popular; especially among young people. A January 28, 1999 Washington Post article noted that Tommy Hilfiger is recognized by teenagers as third in the list of top three "coolest" brands, surpassing such well-known brands as Sony, Coca-Cola, and Ford.(1) This popularity is reflected in over $840 million in sales in 1998. In light of this popularity, it is not surprising that Tommy Hilfiger clothing is expensive. Many Tommy Hilfiger basic shirts and pants sell for $100 or more.
The Commission's complaint, among other things, alleged that certain Tommy Hilfiger garments did not state a "regular care procedure needed for the ordinary use of the product." As a result, according to the complaint, many consumers following the stated care instructions found color dye bleeding from one portion of garments to other portions. To address these alleged violations, Tommy Hilfiger agreed to comply with the Care Labeling Rule and to list a toll free help line on care labels. It also agreed to pay a $300,000 civil penalty.
While the $300,000 penalty is indeed significantly higher than the penalties we have obtained in prior Care Labeling Rule cases, I am concerned that it may not provide sufficient deterrence to large profitable garment industry companies. Further, care labeling cases can cause enormous monetary injury to consumers who may spend $100 on a shirt, wear it a few times, and then find it ruined after following the prescribed instructions. This injury 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.
Thus, 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.
1. Study by Teenage Research Unlimited, Fall 1998.