In the world of luxury fashion, where the allure of exclusivity meets the burgeoning appeal of “vintage” products, this legal battle casts a spotlight on the dynamics between intellectual property rights and the thriving market for pre-owned goods.

Whether the media attention surrounding this decision will cause consumers to think twice about purchasing products from luxury resellers such as WGACA, The Real Real, and others, remains to be seen. Regardless, it should cause resellers to re-examine their marketing and sourcing decisions, and provide luxury brands with confidence that they have some recourse to protect their intellectual property in the resale market.

This advisory provides a brief summary of the lawsuit and tips for brand owners to protect their rights in the resale market.

The class action complaint focused on two types of practices:

• False Sense of Urgency: The plaintiffs alleged that SelectBlinds used countdown timers and other tactics to suggest that sales were about to end. When the timers hit zero, though, the retailer would launch a new sale “with a different name but a comparable discount, with an updated timer stating that the sale would expire at midnight the next day.” Allegedly, that cycle continued for over a year.

• Misleading Regular Prices Discounts: The plaintiffs alleged that SelectBlinds often advertised a “regular” price with a strikethrough, followed by the sale price. The retailer also often advertised the percentage of the discount comparing the sale price to the regular price. According to the plaintiffs though, SelectBlinds rarely sold the items at the regular prices – they were almost always on sale.

It’s likely that these types of lawsuits will continue, so retailers need to pay close attention to these cases and to pricing laws, particularly when they advertise discounts, sales, or other price reductions.

Here are a few highlights from FTC’s complaint:

• The companies made unqualified “Made in USA” claims about many of their products. Despite the broad claims, the FTC alleged that many of products were wholly imported or contained significant imported content.
• The companies made qualified claims that some belts were “Made in USA from Global Materials” because they took straps that were made in Taiwan and attached buckles in the US. The FTC alleged the claims were misleading because “attaching a buckle to a belt strap is a minimal assembly operation that does not change the name, character, or use of an imported belt strap.”
• By providing materials with those claims to trade partners, the companies provided the “means and instrumentalities” for those partners to commit deceptive acts or practices.

Here are a few highlights from the settlement:

• The companies are prohibited from making unqualified US-origin claims for any product, unless they can show that the product’s final assembly or processing – and all significant processing – takes place in the US and that all or virtually all components are made and sourced here.
• If companies make qualified claims, they must include a “clear and conspicuous” disclosure – as that term is defined in detail in the settlement – about the extent to which the product contains foreign parts, components, or processing.
• If the companies make claims about the assembly of a product, they must ensure that the product is last substantially transformed in the US, its principal assembly takes place here, and US assembly operations are substantial.
• The companies can’t provide materials to third parties that would enable them to make any prohibited claims.

In addition, the companies have to pay a monetary judgment of $191,481 and inform certain customers about the FTC action. This case demonstrates that the FTC continues to take “Made in USA” claims seriously. If you make claims about domestic origin, be sure to take a close look at the FTC’s Made in USA Labeling Rule and assess how well you’re complying. In the meantime, enjoy the Fourth of July holiday.

• Collect and verify certain information from “high-volume third party sellers”;
• Suspend sellers that fail to comply;
• Protect the information they collect against breaches and misuse;
• Disclose sellers’ contact information to purchasers; and
• Post a “reporting mechanism” on each seller’s website where consumers can report “suspicious activity.”

The law also charges the Federal Trade Commission (FTC), the state attorneys general (AGs), and “other state officials” with enforcement; gives the FTC rulemaking authority; and authorizes substantial civil penalties for violations (as much as $50,120 per violation).

With the effective date upon us, here are some resources to aid companies with compliance:

• Kelley Drye’s blogpost, summarizing the Act’s requirements and providing background on why the law was passed and how the FTC and AGs are likely to enforce it: “New Law Governing Online Platforms And Sellers Takes Effect In June – Are You Ready?”
• The FTC’s guidance for businesses: “Informing Consumers about the INFORM Consumers Act” (see also the FTC’s accompanying business blogpost)
• The FTC’s guidance for consumers: “The INFORM Consumers Act and online marketplaces: What to know”
• The FTC’s warning letters to 50 online marketplaces, underscoring that they must be in compliance “on day one”: “FTC Puts Online Marketplaces on Notice About Their Responsibilities Under the New INFORM Consumers Act”
• Today’s blogpost from the FTC, heralding the arrival of the effective date; stating that online marketplaces must be in “full compliance” and should communicate with third-party sellers about what the law requires; and urging consumers to report violations to the FTC.
• A recording of Kelley Drye’s recent webinar on the Act, featuring Kate and Abby: “INFORM Consumers Act – What Online Marketplaces and Sellers Need to Know.” As we emphasize in the discussion, the Act puts the onus on online marketplaces to ensure compliance, but will also have significant effects on sellers, who must furnish and post key information or risk suspension from selling online.
• The Act itself, for those that want to dive into the nitty gritty.

The bottom line is that, if you’re covered by the law — whether as an online marketplace or a “high-volume third party seller” — you should develop and implement a compliance plan now, train your employees on it, and monitor it for effectiveness. If you have questions, Kelley Drye can help.

Our webinar will feature Kate White (another veteran FTC-er who served as an Attorney-Advisor for former Commissioner Noah Phillips); and Abby Stempson (a former Assistant Attorney General and official at the National Association of Attorneys General). We’ll tell you what the Act requires; how the FTC and State AGs are likely to enforce it; and what you should be doing to get ready. We’ll also answer your questions.

And note that we’re not the only ones blogging about the Act. Last week, the FTC released a blogpost and guidance on INFORM, which we’ll also address in our webinar.

We hope to see you at the webinar!

Lizama argued that H&M misled consumers into thinking that its Conscious Choice collection was “environmentally friendly.” (By our count, that phrase appears more than 100 times in the complaint.) The court pointed out, though, that H&M never actually uses that phrase to describe its garments. Moreover, H&M does not represent that its Conscious Choice products are “sustainable” – only that the line includes “more sustainable materials” and its “most sustainable products,” which the court said are obvious comparisons to H&M’s regular materials.

Lizama argued that the garments were not sustainable because recycling PET plastics into clothing isn’t as good for the environment as recycling those plastics into plastic bottles. Even if that’s the case, the court noted that the comparison wasn’t relevant in determining whether H&M’s claims were misleading. “Instead, the relevant comparison is whether one garment using recycled polyester is more sustainable than another garment using non-recycled (also known as virgin) polyester.”

The court noted that H&M provided “copious amounts of information” about its comparisons on its website (which Lizama admittedly reviewed). “H&M disclosed on its website all of the information Lizama needed to determine the source, composition, and relevant comparison of the ‘more sustainable materials’ used by H&M in its Conscious Choice collection. For this reason, Lizama’s claims that he was misled into believing something that was never represented by H&M must fail.”

The court also rejected Lizama’s contention that H&M’s claims are “unqualified general environmental benefit claims” as defined by the FTC’s Green Guides. Indeed, the court said the sustainability claims were clearly qualified by “explaining that its conscious choice items are made with ‘a little extra consideration for the planet’ because they use ‘more sustainable materials’ than its regular collection.” The court also dismissed Lizama’s argument that the messaging overstated the environmental benefit since the products in the conscious choice category included only those with the majority of their materials being ‘more sustainable’ than the regular collection.

There’s a lot more going on in this case, and the decision may be worth a read for retailers making similar claims, but there is at least one important takeaway in this case. Plaintiffs will continue to file lawsuits when their ideas about what is “sustainable” or good for the environment differs from a company’s ideas about those concepts. Companies will fare better in those lawsuits if they are able to provide detailed and accurate information to explain their claims and have substantiation that the touted attributes actually result in an overall benefit for the environment.

For more information on these topics and the increase in legal risks associated with ESG messaging, please join our Hot Topics in Green Marketing webinar on May 31, 2023.

In 2020, online retailer Boohoo – whose brands include PrettyLittleThing, NastyGal, and boohooMAN – was hit with a lawsuit alleging that it frequently ran misleading sales. For example, had you been in the market for a pair of pink peach skin pocket flared pants at this time two year ago, you might have been excited to find this pair for $14, which is 67% off the crossed-out price of $42:

California law generally prohibits a company from advertising a “former price,” unless that price was the prevailing market price within a three-month period preceding the ad. According to the plaintiffs, though, the retailer had not sold items at the advertised crossed-out price during that three-month period. Instead, the crossed-out price was allegedly made up to create the illusion of a discount.

As part of the settlement, each class member will receive a gift card to use toward the purchase of any item on the site from which they’d originally made a purchase. In addition, the retailer agreed to conspicuously disclose that the “original” price advertised on a product page is not intended to indicate a former price. The required disclosure reads:

Our percentage off promotions, discounts, or sale markdowns are customarily based on our own opinion of the value of this product, which is not intended to reflect a former price at which this product has sold in the recent past. This amount represents our opinion of the full retail value of this product today based on our own assessment after considering a number of factors.

It’s likely that these types of lawsuits will continue, so retailers need to pay close attention to these cases and to pricing laws, particularly when they advertise discounts, sales, or other price reductions. Everyone likes a sale (and some people like pink peach skin pocket flared pants), but if you aren’t careful about how you structure your sales, your company could end up paying a high price in the end.

Last year, MPS challenged various claims that 4Patriots made about its food kits at the NAD, and this year, 4Patriots filed its own challenge against MPS. Although much of what’s in NAD’s decisions may not be relevant to companies outside of this niche market, the most recent decision address at least three issues that regularly come up across a broad range of industries.

Made in USA

The MPS website included various claims that products were “Made in USA” alongside patriotic imagery. Because 4Patriots sells similar products, it knows that some of the ingredients in the MPS kits are likely to be imported. NAD summarized the requirements for “Made in USA” claims – which we’ve also summarized here – and recommended that MPS qualify its claims with a clear and conspicuous disclosure explaining that some of the ingredients in its kits are imported.

False Sense of Urgency

4Patriots argued that MPS creates a false sense of urgency by suggesting that sales are about to expire, when that’s not true. MPS provided evidence showing that various sales ended as advertised, and NAD agreed that those examples were not misleading. However, 4Patriots submitted examples of two sales that allegedly continued past their advertised end date.

NAD noted that it “is well-established that when an advertiser represents an offer to be for a limited time, that offer must, in fact, be available for only a limited time, and a reasonable amount of time must pass before the advertiser can make similar claims again.” NAD recommended that MPS “take appropriate steps to ensure that its time-limited claims are in fact limited.”

Reviews

Because the MPS site includes a higher percentage of 5-star reviews than other sites have for MPS products, 4Patriots suggested that MPS manipulates reviews. MPS explained that it posts all verified reviews, as long as they don’t contain offensive language, regardless of whether they are positive or negative. It suggested that some negative reviews on other sites may be related to products sold by unauthorized resellers, who may be selling outdated or sub-standard products.

NAD did not appear to take a side on the dispute about whether MPS had manipulated its reviews – something it likely couldn’t determine based on the record – but it did recommend “that when the advertiser’s website appears to publish all product reviews, that the advertiser post all reviews on its website, subject to its policy preventing reviews with vulgar or offensive language.”

Lessons

There aren’t any surprises in the decision, but there are a few points worth noting:

• Although the FTC has been the main source of Made in the USA complaints (like this one), complaints can also come from competitors. That’s particularly true in cases where competitors use similar ingredients or components that are sourced from similar suppliers and have a good idea of how you operate.

• Creating a sense of urgency can be an effective (and lawful) marketing technique as long as your claims are accurate and sales end when you say they will. But, as we’ve posted before, a false sense of urgency can lead to complaints from consumers, regulators, and competitors.

• The authenticity of reviews has long been a concern of the FTC and other regulators. (Click here, here, and here, for example.) Competitors and consumers are likely to bring more challenges as well, though proving fraud could be difficult without discovery (something that isn’t available in an NAD proceeding).

For more advertising and privacy law survival tips, be sure to check out our blog, our podcast (where you can hear our posts read by our talented host in her mellifluous voice), and other resources.

• Some emails advertised that products were on sale “today only” or “this week only.” The next day (or the next week), however, the plaintiffs received emails advertising the same sale.

• Some emails advertised that consumers had one “last chance” to take advantage of a discount. The next day, however, the plaintiffs received emails advertising the same discount.

• Some emails advertised a sale with a fixed deadline. The next day, however, the plaintiffs received emails stating that the sale had been “extended.”

Moreover, some of those emails include images of ticking clocks and language urging consumers to “hurry” or “open quickly.” The complaint alleges that these tactics create a false sense of urgency by suggesting that consumers had to act quickly to take advantage of a sale, when that wasn’t true.

Exhibits to the complaint include examples of 51 emails received by one plaintiff and 40 received by the other, along with explanations of why the plaintiffs think the subject lines are false and examples of other emails that allegedly contradict claims in the challenged emails.

The plaintiffs argue that Old Navy’s tactics violate Washington’s Consumer Protection Act and Commercial Electronic Mail Act (which has a limited private right of action), and they are seeking $500 in statutory damages per each email that violates the latter.

As we wait to see how this case develops, companies should ensure that they don’t misrepresent their promotional offers. Creating a sense of urgency can be an effective (and lawful) marketing technique as long as all claims are accurate. But a false sense of urgency will annoy consumers, lead to lawsuits, and generate unwanted attention from regulators.

Last week, consumers filed a class action against Safeway and its parent company alleging that the grocer unlawfully inflates the regular retail price of products used in buy-one-get-one-free promotions, causing consumers to effectively still pay for the “seemingly” free product. For example, the complaint alleges that Safeway sold a product for $7.47 one day and for $10.99 the next day, as part of a BOGO offer.

The complaint cites the FTC’s guides on using the word “free” – which state that a consumer “has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise … by marking up the price of the article which must be purchased” – and argues that the guides should be persuasive in determining whether a practice violates state law.

It’s too early to tell how this case will turn out or how the FTC’s guides, which were adopted in 1971, will apply today in a context in which some retailers adjust their prices frequently. It’s likely that these types of suits will continue as bargain conscious consumers look for sales, though. We’ll keep our eyes open for updates. In the meantime, you can click here for more developments on pricing and sale practices.

For textiles, the law requires manufacturers to provide retailers and distributors with a certificate of compliance stating that the product does not contain any “regulated PFAS,” which are defined as PFAS “that have a functional or technical effect in the product.” Further, the ban applies to PFAS present in textile articles present above certain minimum thresholds, as measured by total organic fluorine content: 100 parts per million as of January 1, 2025, with a reduction to 50 parts per million in 2027.

The law also requires a manufacturer to use the “least toxic alternative” when replacing regulated PFAS in textile articles. The term “least toxic alternative” is not defined in the legislation but presumably envisions a process similar to the “Alternatives Analysis” required for manufacturers of products subject to the state’s Safer Consumer Products (SCP) program.

Notably, the PFAS prohibition is delayed until 2028 for “outdoor apparel for severe wet conditions.” Such products, however, must be clearly labeled as “Containing PFAS chemicals” starting January 1, 2025. Full exemptions from the ban are provided for “personal protective equipment” (PPE) and “clothing items for exclusive use by the United States military.” Carpets and rugs are excluded from the ban as they are currently regulated under the SCP program.

The cosmetics ban extends a previous California law prohibiting 13 specific PFAS chemicals to all of the thousands of different PFAS substances in existence. No minimum PFAS content threshold is provided in the law, which may present a challenge to companies seeking to demonstrate that PFAS have not been intentionally added to a cosmetics product and that any amount identified is from contamination in raw materials, water or other unknown sources.

While the California ban is among the most aggressive legal prohibitions related to PFAS in products, the scope of the ban does not go as far as recent legislation adopted in Maine, which applies to all products containing intentionally added PFAS (unless for “unavoidable uses” which have yet to be defined). The California prohibition, however, goes into effect much sooner (starting in 2025) than the 2030 ban in Maine. (Maine has banned PFAS in carpets and rugs as of 2023.)

Governor Newsom also declined to further extend California’s PFAS regulations by vetoing legislation that would have required consumer product manufacturers to submit annual reports on intentionally added PFAS in all products and product components beginning in 2026. In 2021, Maine adopted a similar reporting requirement that goes into effect January 1, 2023.

With the final adoption of the California PFAS prohibitions, all eyes now turn to New York, where Governor Hochul is weighing signature of legislation passed earlier this year to ban intentionally added PFAS in apparel starting in 2024.

Find out more on PFAS on our Kelley Green blog.

Leaning on the Quartz article, the complaint alleges that the company “conveniently and egregiously” presented negative results as positive ones in its scorecards. For example, one scorecard claimed that a dress “was made with 20% less water on average,” when Quartz determined that the dress “was actually made with 20% more water.” The plaintiff claims that “a majority” of the products that H&M markets as being sustainably-made are actually “no more sustainable than items in [its] main collection, which are also not sustainable.”

(H&M removed the scorecards, which were based on the Higg MSI calculations, shortly after Quartz published the article. Facing scrutiny over its use of Higg MSI, the Sustainable Apparel Coalition also announced that it was pausing the use of the tool, pending further investigation. Critics who think that Higg MSI doesn’t measure enough of a product’s lifecycle are happy with that decision, but members of the Coalition and others who rely on Higg MSI are left to wonder what’s next.)

The plaintiff looks beyond the article and cites a number of other claims that allegedly mislead consumers, including claims that products are a “conscious choice,” a “shortcut to sustainable choices,” and made from “sustainable materials.” Moreover, the plaintiff alleges that statements that H&M will prevent its clothes “from going to landfill” through its recycling program are also misleading because recycling options are not commercially available on a large enough scale. According to the complaint, “it would take H&M more than a decade to recycle what it sells in a matter of days.”

The complaint covers a lot of ground, and it’s too early to predict how the case will turn out. Nevertheless, the case serves as another reminder that green claims continue to face scrutiny from a number of sources, including competitors, regulators, plaintiffs’ attorneys, and the press. Negative attention from one source can lead to negative attention from others. It’s important for companies to ensure that their claims are backed by solid evidence and that the language they use is closely tailored to that evidence.

Bass Pro sells a product called “RedHead® Lifetime Guarantee All-Purpose Socks.” As the name suggests, the company prominently advertises that the socks are subject to a lifetime guarantee and that “if they wear out, they get replaced.” In a YouTube video, a store manager elaborates on that, saying: “If anything ever happens — if the dryer steals one of them on you — you bring the other one in, and we give you a brand new pair of socks.”

Whether or not our man in Missouri had socks stolen by his dryer we may never know, but we do know that he took advantage of the lifetime guarantee a number of times since 2015, “typically 2-4 pair at a time.” Each time, Bass Pro replaced the socks with new socks that were subject to the same lifetime guarantee. That changed last year, though, when he attempted to exchange four pairs of socks. This time, he was given “distinctively-marked 60-Day Socks.”

(If you’re not sure what you’re wearing, glance down towards your calves. If you see a “distinctive stripe pattern” on your socks, that could be a warning that they’re just 60-Day Socks. Tread carefully.)

The lawsuit alleges that Bass Pro has engaged in false advertising and that it failed to honor its warranty. Although it’s too early to tell how this case will turn out, this lawsuit is worth contemplating for any company that is considering a lifetime warranty. A lifetime warranty may be a big selling point but, as the saying (sort of) goes: “With big selling points come big responsibilities.” Absent any clear disclosures, those responsibilities could last a lifetime.

As workforces become increasingly mobile and remote work is more the norm, employers face the challenge of balancing the protection of their employees’ personal data and privacy against the need to collect and process personal data to recruit, support and monitor their workforces. Mounting regulations attempt to curb employers’ ability to gather and utilize employee data—from its historical use in processing employee benefits and leave requests to employers’ collection, use or retention of employees’ biometric data to ensure the security of the organization’s financial or other sensitive information systems. Learn what employers can do now to protect employee data and prepare for the growing wave of data privacy laws impacting the collection and use of employee personal data.

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Avoiding Price Gouging Claims Wednesday, August 3 Recently State Attorneys General, the House Judiciary Committee, and many others have weighed in on rising prices in an attempt to weed out price gouging and other forms of what they deem “corporate profiteering.” States and federal regulators are carefully looking at pricing as consumers and constituents become more sensitive to the latest changes and price gouging enforcement is an avenue states may be able to use to appease the public. Unlike other emergencies in the past, the current state of supply chain and labor shortages, along with skyrocketing costs for businesses, make it unrealistic for companies to simply put a freeze on any price increases. This webinar will cover:

• The basics of price gouging laws and related state emergency declarations and how to comply • The differences and varied complexities in state laws • General best practice tips • How AGs prioritize enforcement

Register

* * * *

Find more upcoming sessions, links to replays and more here

Among other things, the plaintiff took issue with Allbirds’ life cycle assessment (“LSA”) tool and its use of the Higg Material Sustainability Index (“MSI”) to measure the environmental impact of materials. For example, the plaintiff argued that the LSA tool only measures the carbon footprint of each product, while omitting other environmental impacts, and that the Higg MSI only includes raw materials and that it doesn’t account for the entire lifecycle of wool production.

The court determined that many of the plaintiff’s complaints about the LSA tool simply amounted to criticisms of the tool’s methodology, and that the plaintiff did not actually describe any false or misleading statements. The court held that Allbirds “does not mislead the reasonable consumer because it makes clear what is included in the carbon footprint calculation, and does not suggest that any factors are included that really are not.”

The court came to similar conclusions about use of the Higg MSI. The plaintiff’s criticism that the calculation doesn’t go beyond raw materials or that results would be higher if it had considered the entire lifecycle of wool production is “simply a critique of its methodology.” Just because a standard may have room for improvement, does not render a company’s reliance on that standard deceptive. Again, Allbirds clearly discloses its use of the Higg MSI.

The plaintiff also argued that Allbirds omitted information about “the environmental impact of the wool industry’s methane emissions, land occupation, and eutrophication.” Although companies are required to disclose material information, there is no obligation under New York law “to provide whatever information a consumer might like to know.” Again, the court found it unlikely that consumers would have expected Allbirds calculations to include anything other than what the company had described.

Although there are still a lot of gray areas when it comes to green claims, this decision suggests that companies have some flexibility in how they measure the environmental impact of their products. That flexibility has its limits, though. Companies will need to use reputable methodologies and clearly disclose the basis of their claims. Unqualified environmental benefit claims and claims that may imply a larger benefit than a company can substantiate still pose a high risk.

According to a two-page complaint, Fashion Nova used a third-party online product review management interface to automatically post four- and five-star reviews to its website and hold lower-starred reviews for the company’s approval. But for about four years, Fashion Nova never approved or posted hundreds of thousands of negative reviews. According to the FTC, suppressing negative reviews “deprives consumers of potentially useful information and artificially inflates the product’s average star rating” in violation of Section 5 of the FTC Act.

Under the proposed settlement, Fashion Nova is prohibited from making misrepresentations about customer reviews. In addition, the company must generally post all customer reviews, with the exception of reviews that (a) are unrelated to the company’s products or customer service or (b) contain obscene, sexually explicit, racist, or unlawful content, so long as the criteria is applied uniformly to all reviews. Readers should keep these guidelines in mind when filtering reviews or working with review platforms to manage reviews.

In addition to making these changes, Fashion Nova must pay $4.2 million in monetary relief. Interestingly, although the press release cites the FTC’s October 2021 Penalty Offense letters related to endorsements and testimonials, neither the complaint nor the order cite to the Penalty Offense authority or any other statutory authority for the FTC to obtain monetary relief. This could be because the actual Penalty Offense notice doesn’t address the issue of suppressing negative reviews and instead focuses on misrepresentations related to endorsements and testimonials more broadly.

Finally, in conjunction with announcing the settlement with Fashion Nova, the FTC also released two guidance documents on reviews: one geared towards marketers that provides do’s and don’ts for soliciting reviews and working with other companies such as comparison websites, review platforms, and SEO and reputation management companies, and the other for platforms that addresses review collection, moderation, and publication.

Last week, New York lawmakers announced a bill aimed at imposing sustainability reporting requirements on the fashion industry. If passed, the Fashion Sustainability and Social Accountability Act would generally require major fashion retailers to map their supply chains, make various disclosures on their websites, and commit to reducing their environmental impact.

The law would broadly apply to fashion retail sellers and manufacturers with more than $100 million in gross revenue that do business in New York. These companies would have to use good faith efforts to map a minimum of 50% of their suppliers by volume across all tiers of production, from raw material to final production. Based on this exercise, companies would have to disclose certain information on their websites, including:

• A supply chain mapping and disclosure, with information about the company’s suppliers.
• An impact and due diligence disclosure, including a social and environmental sustainability report, with information on due diligence policies and activities conducted to identify, prevent, and mitigate potential adverse impacts, including the findings and outcomes of those activities.
• An impact disclosure on prioritized adverse environmental and social impacts within 18 months after enactment of those policies, including information on greenhouse gas emissions, volume of materials produced, recycling efforts, median wages of workers of prioritized suppliers, and the company’s approach for incentivizing supplier performance on workers’ rights.
• A disclosure about what targets the company has for impact reductions and for tracking due diligence implementation and results, including estimated timelines and benchmarks for improvement.

Although activists (and even some members of the fashion industry) have expressed support for the bill, there is no doubt that companies will be required to devote a lot of time, money, and effort into compliance, and that they will be required to disclose information (such as supplier lists) that they may otherwise consider to be confidential.

We are monitoring developments in this legislation and will post on major developments here.

Everlane advertised some of its apparel as “Safer For The Environment: This product is dyed with bluesign®-approved dyes, which are safer for dyehouse workers and better for the environment.” Bluesign is a third-party certification that assesses chemical safety standards in the textile industry and evaluates their impact on human health and the environment. Product certification requires auditing and verification that the manufacturing process complies with Bluesign’s rules and chemical safety standards at each step of the supply chain. Everlane relied on its bluesign certification where 12% of its mills and 10% of its factories are bluesign-certified and noted its goal of fully adopting Bluesign certification by 2025.

When reviewing this claim, NAD considered the reference to the Bluesign third-party certification as a qualification for the general environmental benefit claim. NAD determined that while the Everlane claim is qualified as it pertains to why the product is safer (use of bluesign®-approved dyes), there was no immediate reference to Bluesign as an independent certification on the specific product page where the “safer for the environment” claim appears. We interpret that to mean that NAD thought referencing the certification was similar to a general environmental benefit claim without explaining more about the certification. Thus, NAD recommended that Everlane explain that Bluesign is an independent third-party certification designed to remove harmful chemicals from the environment.

NAD also evaluated whether or not the certification provides a reasonable basis for the claim. While NAD found Bluesign to be a reliable and effective third-party certification body for assessing chemical safety, it noted that Bluesign assesses only one out of five areas in which a material’s environmental impact is typically assessed. For example, a widely recognized material assessment tool in the fashion industry, the Higg Material Sustainability Index (“MSI”), evaluates the environmental impacts of a material in five areas, and chemical composition is just one of those areas. In addition, NAD concluded that consumers may not recognize the nascent state of Everlane’s adoption of Bluesign certification. Based on this assessment, NAD recommended that Everlane qualify the claim to clearly convey that Bluesign has a more limited environmental impact on environmental practices and Everlane’s nascent incorporation of the certification.

This serves as a reminder for fashion companies wanting to demonstrate their efforts and commitment to the environment to consider whether any claim they want to make needs language to explain the claim or otherwise clarify any limitations.

Katrina Hatahet, a law clerk with Kelley Drye & Warren, assisted in the drafting of this post.

Product Content Claims

Everlane made claims about the number of recycled bottles that had been used in certain products, such as a parka (“60 plastic bottles renewed”) and a sweatshirt (“15 plastic bottles renewed”). To substantiate the claims, the company provided evidence that it works with plastic pellet producers to calculate the amount of plastic needed to produce a fixed amount of yarns, figures out how much yarn is used in a product, and uses an average bottle size to calculate the number of bottles that were renewed.

Everlane used the same type of data to support a broader claim that, to date, the company had “recycled over nine million plastic bottles.” Everlane provided evidence of the number of garments it had produced using recycled plastic since 2018 and, using the same math, calculated the number of bottles that had been recycled since then. NAD determined that the math checked out in both cases and that Everlane had a reasonable basis to make both claims.

Aspirational Claims

In addition to claims about current practices, Everlane advertised that it intended to remove virgin plastic from its entire supply chain by 2021. As we’ve mentioned in recent posts, aspirational claims can be tricky to substantiate because you can’t prove what hasn’t happened. But that doesn’t mean that you can just rest on good intentions. NAD has held that “an advertiser must be able to demonstrate that its goals and aspirations are not merely illusory and to provide evidence of the steps it is taking to reach its stated goal.”

In this case, Everlane relied heavily on its Global Recycled Standard (or “GRS”) certification. GRS is an international standard that relies on well-established international and regulatory guidance (including the FTC’s Green Guides) for what constitutes recycled content. GRS also has stringent rules for third-party certification of chain of custody of recycled materials, content claims, social and environmental production practices, and chemical restrictions across manufacturing processes.

Everlane explained that it does not source GRS-certified materials containing any virgin polymers and only uses recycled polyester and recycled nylon content for its yarns. Also, in accordance with GRS standards, each stage of production is certified by an independent third-party. On its website, Everlane explains how it had achieved 90% completion of its goal and what it is doing to achieve the last 10%. Based on this evidence, NAD found the advertiser has a reasonable basis for its aspirational claim.

Safer for the Environment

Stay tuned for another post, where we’ll look at how NAD analyzed “Safer For The Environment” claim and provide other tips for substantiating green claims.

The complaint – which is based largely on a PETA article – alleges that the life cycle assessment tool Allbirds uses to identify the carbon footprint of its products does not assess the environmental impact beyond the manufacturing of the shoes. Because it excludes things like the impact of wool production on the environment, it understates the environmental impact. Moreover, the complaint alleges Allbirds bases its carbon footprint figures on “the most conservative assumption for each calculation,” so that it can make more aggressive claims.

The plaintiff also argues that Allbirds makes “misleading animal welfare claims,” including by advertising “happy sheep” that live the “good life.” Based on the PETA article, the plaintiff alleges that the sheep may not be quite so content.

Although the FTC’s Green Guides provide guidance on various types of environmental claims, there isn’t a lot of clarity on the types of claims mentioned in this complaint. It’s too early to predict how this case will turn out, but this case and others like it – such as the lawsuit against Coca-Cola we wrote about this summer – suggest that plaintiffs will take advantage of that lack of clarity and continue to challenge ESG initiatives.