The story of the great bamboo swindle traces back to January 2010, when the FTC sent letters to dozens of companies warning them that they could be breaking the law by mislabeling their Rayon textiles as bamboo. As the FTC explained in the letter, Rayon is created by treating plant or tree cellulose with chemicals, a process that creates air pollution. Even if bamboo is used in the process, the resulting textile is Rayon, and can't be called bamboo. The FTC even distributed a helpful business alert entitled "How to Avoid Bamboozling Your Customers." (Get it? Bamboo-zling?)
Unfortunately, the companies now being fined apparently chose to ignore those letters. Amazon (AMZN), which incorrectly advertised a crib sheet as "100% organic bamboo," was fined $455,000. Sears (SHLD) was dinged to the tune of $475,000 for similar misrepresentations by both Sears and subsidiary Kmart. Macy's (M) was fined $250,000, and a fourth retailer, Leon Max, was fined $80,000. The size of the fines was dependent on how many mislabeled products were sold by each retailer, as well as how long it continued to sell the products after getting the letter.
The order levying the fines also prohibits the companies from further misrepresentations about the bamboo content of their textile products. Of course, it's hard for any retailer to be absolutely certain of the contents and manufacturing process of every item on its shelves. If a shipment of blankets arrives from a supplier with a tag identifying it as bamboo, you can't really expect Macy's to test them to ensure they're the genuine article. As such, the order says that a retailer must only obtain a "good faith" guarantee that it was properly labeled. If the products come from a foreign supplier, the retailer will only be liable if they had some way of knowing that the product was mislabeled.
So while the fines mean that retailers will be more careful about their labeling going forward, it doesn't guarantee that American consumers won't be duped by phony bamboo in the future. And the next time you see a blanket or garment made of fabric labeled as "organic bamboo" or touting its environmental benefits, understand that you might be getting bamboozled.
Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.