A Brief Analysis of the Textile Labeling Rules 2014 Amendments

By Jamie Rubin & Andrew L. Hoffman The FTC amended the Textile Labeling Rules on March 14, 2014.[1] These amendments do not impose new obligations on textile manufacturers or retailers, and at least one of the changes will likely benefit manufacturers. Namely, a hang-tag is no longer required to include a full fiber content disclosure, thereby enabling the creation of a single hang-tag for a variety of garments that share the advertised fiber, but which otherwise have different fiber compositions. This change will also enable manufacturers to create hang-tags before the final garment fiber content is known. In addition, the FTC declined to implement its proposed changes to the continuing guarantee requirement in the face of industry objections. See below for a summary of the other changes and our analysis.

These amendments will become effective 30 days after publication in the Federal Register:

  • Hang-tags will no longer need to provide a full fiber content disclosure (e.g., 60% polyester, 35% cotton, 5% lycra). However, if the garment contains fibers other than those disclosed on the hang-tag, the hang-tag must disclose clearly and conspicuously that it does not provide the product’s full fiber content (e.g., “This tag does not disclose the product’s full fiber content.” or “See label for the product’s full fiber content.”) Therefore, a manufacturer could focus a hang-tag on the benefits of a particular fiber in the garment (e.g., lycra) without mentioning the existence of the polyester and cotton in that same garment. Such an amendment may make it easier for manufacturers to produce a hang-tag before the final composition of a garment is known, or to produce a hang-tag for a variety of garments that share the advertised fiber, but which otherwise have different fiber compositions. The amendments do not alter the requirement of a full fiber content disclosure in advertising.
  • The 2010 version of ISO 2076 has been incorporated into the Textile Labeling Rule, thereby establishing the generic names (e.g., acrylic, polyester) for the manufactured fibers set forth in the current ISO standard. The pre-amendment rules incorporated only the 1999 version of ISO 2076, so this amendment is timely. The amendment does not alter the generic names for any of the fibers that are already specifically identified in 16 C.F.R. 303.7. Manufacturers remain free to petition the FTC to establish a generic name for a manufactured fiber not recognized in ISO 2076 pursuant to 16 C.F.R. 303.8.
  • The amendment alters the rule for determining an imported product’s country of origin. Under the new rule, an imported product’s country of origin is the country where the product was processed or manufactured, as determined by the laws and regulations enforced by U.S. Customs and Border Protection. This amendment replaces the FTC’s prior standard – “the country where such textile fiber product was processed or manufactured. Further work or material added to the textile fiber product in another country must effect a basic change in form in order to render such other country the place where such textile fiber product was processed or manufactured.” This amendment eliminates potential conflicts or ambiguities that could arise under the different standards. For instance, the pre-amendment rules were drafted to be consistent with Customs regulations, which permitted the country of origin to be where the garment was “manufactured or substantially transformed.” However, the Customs regulations no longer use that language; instead, the Customs statute and rules now provide detailed rules for establishing country of origin of a textile product. See 19 U.S.C. § 3592; 19 C.F.R. §§ 102.21-102.22.
  • The definitions of “invoice” and “invoice or other paper” were amended to clarify that such terms apply to electronic records, and that the E-SIGN Act allows for the preservation of records “in a form that is capable of being accurately reproduced for later reference, whether by transmission, printing, or otherwise.” In this same vein, the term “invoice or other paper” was replaced with “invoice or other document.” This amendment merely recognizes the fact that business transactions involving textile products may now occur electronically.
  • Continuing guarantees will no longer need to be signed under penalty of perjury. Currently, a guarantor must “guaranty that all textile fiber products now being sold or which may hereafter be sold or delivered to ___ are not, and will not be misbranded nor falsely nor deceptively advertised or invoiced . . .” and sign under penalty of perjury. Under the amendment, the guarantor must simply acknowledge that furnishing a false guaranty is an unlawful unfair and deceptive act or practice and certify that the guarantor will actively monitor and ensure compliance with the Textile Fiber Products Identification Act and rules and regulations during the duration of this guaranty. The Continuing Guaranty form has been updated accordingly. In the Notice of Proposed Rulemaking preceding these amendments, the FTC explained that “swearing to future events is problematic and may present enforcement issues.” 78 FR 29263, 29271 (2013).
  • In response to several industry objections, the FTC declined to implement its proposed changes that would have required continuing guarantees to be renewed annually. Industry commenters argued that the time burden of re-signing continuing guarantees would be substantial and would add administrative costs and burdens without making guarantees more reliable. The FTC admitted that it lacked sufficient evidence to conclude that the proposal would increase the reliability of continuing guarantees or that the benefits of the proposal would exceed the costs. The FTC noted that it has concerns that continuing guarantees that remain in effect indefinitely or until revoked may become less reliable over time, and the FTC noted that it would revisit the issue if it obtains evidence that supports its concerns. Because the FTC has indicated that it may revisit the issue of continuing guarantees, textile product manufacturers should monitor the FTC’s actions on this issue.

[1] The Textile Act Rules are officially titled the Rules and Regulations Under the Textile Fiber Products Identification Act.