Home products retailer Williams-Sonoma will have to pay almost $3.2 million for violating a Federal Trade Commission “Made in USA” order.
Williams-Sonoma was charged with advertising multiple products as being “Made in USA” when they were in fact manufactured in other countries, including China. That violated a 2020 commission order requiring the San Francisco-based company to be truthful about whether its products were in fact made in the U.S.
The FTC said Friday that Williams-Sonoma has agreed to a settlement, which includes a $3.175 million civil penalty. That marks the largest-ever civil penalty seen in a “Made in USA” case, the commission said.
“Williams-Sonoma’s deception misled consumers and harmed honest American businesses,” FTC Chair Lina M. Khan said. “Today’s record-setting civil penalty makes clear that firms committing Made-in-USA fraud will not get a free pass.”
In addition to paying the penalty, the seller of cookware and home furnishings will be required to submit annual compliance reports, the FTC said. The settlement also imposes and reinforces a number of requirements about manufacturing claims the company can make.
Why? We want to disincentivize malicious business practices, and fines proportional or greater to earnings from those practices are more than enough to convince a for-profit corporation to keep it clean.
Lol. This is the real world, and it’s already proven that the current system is inadequate, it is not enough to stop companies from doing it.
The fact that companies keep continuing to do it is the proof. The fines are NOT enough to disincentivize the practice. The current fines are still less than the benefit the company receives from the act, otherwise they wouldn’t be doing it.
Bullshit like false advertising should have a dramatic punishment, not a slap on the wrist. I don’t give a shit if it bankrupts a business. A business lying to their customers should destroy it. If they want to take a chance at destroying the entire business over something as small as a fake label, they can decide to roll those dice, but don’t be surprised when they lose it all.
As a whole you’re correct, it often is inadequate, but in this very specific case of 7 products including some teen bed-padding, then the fines seem pretty proportional.
It depends on how much they made from these products. If the profit from the sale of those products is more than the $3.2M in fines, it is still just a cost that can be planned for when determining sale price and margins. The penalty needs to be higher than the profit from the deceptive practice or else it’s just a cost that can be planned for, not a real deterrent.
According to their 10-K end of year SEC Filing they made $1.7 Bn cash inflow profits, which resulted in a $1.3 Bn cash balance.
So, hypothetically, if they had made 3.175 Million net profit on selling one of their hundreds of types of bedding products, one of thousands of types of products total, then it would be 1/500th of their total profits across their many brand names and stores, or another possible scenario would be if everything else they sold at a cost and they actually did make this much profit from this specific bedding.
They actually saw a 9.9% decline in net revenue that year, attributed to store closures.