1. News
May 6, 2022

Walmart and Kohl’s to pay $5.5m penalty for product allegations

The retailers are prohibited from making false environmental claims that could mislead customers and businesses.

US-based department store chain Kohl’s and retail giant Walmart have agreed to pay a collective fine of $5.5m over bamboo product allegations.

The Department of Justice (DoJ) and the Federal Trade Commission (FTC) claimed that the two retailers violated the Textile Fibre Products Identification Act (Textile Act) and associated rules (Textile Rules), as well as the FTC Act, with misleading claims about their bamboo-made products.

Since 2015, Kohl’s and Walmart have been selling several products advertised as bamboo-based, including clothing, bedding and bath towels.

The FTC alleged, however, that these products are made of rayon and do not contain bamboo fibres.

Kohl’s will pay $2.5m and Walmart will pay $3m to settle the issue.

FTC Bureau of Consumer Protection director Samuel Levine said: “Kohl’s and Walmart are paying millions of dollars under the FTC’s Penalty Offence Authority for mislabelling their rayon products as bamboo.

“False environmental claims harm both consumers and honest businesses, and companies that greenwash can expect to pay a price.”

The DoJ noted that this is not the first instance of Kohl’s and Walmart engaging in misleading activities, as the companies had received letters from the FTC in 2010 over the improper advertising of rayon products.

The new stipulated orders prohibit the retailers from making ‘misleading or unsubstantiated’ claims that products are made of bamboo.

The ruling also bars them from making claims that products provide environmental benefits because they are derived from bamboo.

DoJ consumer protection branch head deputy assistant attorney general Arun Rao said: “Consumers should be able to trust retailers’ representations about the materials from which their clothes and linens are made.

“The Department of Justice will not tolerate companies that generate sales by making false claims about their textile products.”

Last month, Walmart’s Canadian business opened an advanced grocery distribution centre in Surrey, British Columbia.