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FTC Issues $1.26 Million in Penalties for Mislabeling Rayon Textiles as Bamboo; Announces Enforcement Policy for Directly Imported Products

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP /

On January 3, 2013, the Federal Trade Commission (“FTC”) announced that $1.26 million in penalties will be paid collectively by four national retailers to settle charges that the companies mislabeled various textile products.

According to the FTC, the products were labeled and advertised as made of bamboo, when in fact such products were made of rayon, resulting in a violation of the Textile Fiber Products Identification Act and the FTC’s textile rules. The FTC alleges that these companies continued to mislabel their products even after the FTC issued a business alert to the public in 2009 as well as warning letters directly to 78 companies in January 2010.
The FTC’s guidelines provide that use of the term “bamboo” is not appropriate to describe a fiber which is derived from bamboo via a chemical process. Such processing generally results in a rayon, viscose or other man-made fiber due to the chemical transformation of the bamboo.
Under the FTC regulations, a retailer can avoid liability for mislabeling or false advertising if a retailer obtains a guaranty from its supplier certifying that such products are not mislabeled, falsely invoiced or falsely advertised. However, such guarantees may only be obtained from “a person residing in the United States”. The retailer therefore cannot rely on a guaranty provided by a foreign vendor (i.e., guarantees are not acceptable for directly imported products).
On January 3, 2013, the FTC issued a new Enforcement Policy Statement designed to extend protections to retailers that directly import textile, wool and fur products, where the retailer relies in good faith on the information provided by the foreign seller. Pursuant to the Policy Statement, the FTC will not issue an enforcement action for falsely marketing directly imported textile, fur or wool products, provided the retailer (1) does not embellish or misrepresent claims provided by the manufacturer; and (2) does not market the product as a private label product. The new policy does not apply “if the retailer knew or should have known” that the marketing claim made by the manufacturer was false.

FTC Announces Enforcement Policy Statement for Retailers that Directly Import Textile, Wool, and Fur Products

Federal Trade Commission /

The Federal Trade Commission today announced an Enforcement Policy Statement regarding the Textile Fiber Products Identification Act, the Wool Products Labeling Act, and the Fur Products Labeling Act concerning treatment of certain retailers that directly import textile, wool, and fur products.

The Textile, Wool and Fur Acts allow retailers to avoid liability for mislabelling or false advertising if they rely in good faith on a “guaranty” from a U.S. supplier that certifies that products the supplier provides are not mislabelled, falsely invoiced, or falsely advertised.  Because the statutes provide that retailers may obtain guaranties only from a “person residing in the United States,” they may not obtain a guaranty for directly imported textile, wool, and fur products.  Based on its enforcement experience, the Commission finds it in the public interest to provide greater consistency for retailers regardless of whether they directly import products or use third-party domestic importers.

The Policy Statement provides that the Commission will not initiate an enforcement action for falsely marketing a textile, wool, or fur product if the retailer:  (1) cannot legally obtain a continuing or separate guaranty; (2) does not embellish or misrepresent claims the manufacturer provide s; and (3) does not market the product as a private label product.  This policy does not apply, however, if the retailer knew or should have known that the marketing claim was false.  This policy thus balances the importance of treating fairly retailers who directly import goods with the Commission’s responsibility to enforce the Textile, Wool and Fur Acts and Rules. 

The proposed consent decrees in the bamboo cases that the Commission announces today contain a proviso that reflects this Policy Statement.

The Commission vote approving the Enforcement Policy Statement was 5-0.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP ( 1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

CBP Posts New Guidelines for Late Petitions for Relief from Liquidated Damages Claims

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP /

FDA proposes New Food Safety Standards for Foodborne Illness Prevention and Produce Safety

U.S. Food & Drug Administration /

The U.S. Food and Drug Administration today proposed two new food safety rules that will help prevent foodborne illness. The proposed rules implement the landmark, bipartisan FDA Food Safety Modernization Act (FSMA) and are available for public comment for the next 120 days. The FDA encourages Americans to review and comment on these important proposed rules.
The proposed rules build on significant strides made during the Obama Administration, including the first egg safety rule protecting consumers from Salmonella and stepped up testing for E. coli in beef as well as existing voluntary industry guidelines for food safety, which many producers, growers and others currently follow.
The rules follow extensive outreach by the FDA to the produce industry, the consumer community, other government agencies and the international community. Since January 2011, FDA staff have toured farms and facilities nationwide and participated in hundreds of meetings and presentations with global regulatory partners, industry stakeholders, consumer groups, farmers, state and local officials, and the research community.
“The FDA Food Safety Modernization Act is a common sense law that shifts the food safety focus from reactive to preventive,” said Health and Human Services Secretary Kathleen Sebelius. “With the support of industry, consumer groups, and the bipartisan leadership in Congress, we are establishing a science-based, flexible system to better prevent foodborne illness and protect American families.”
The burden of foodborne illness in the United States is substantial. One in six Americans suffer from a foodborne illness every year. Of those, nearly 130,000 are hospitalized and 3,000 die from their illness. Preventing foodborne illnesses will improve public health, reduce medical costs, and avoid the costly disruptions of the food system caused by illness outbreaks and large-scale recalls.
These two FSMA rules are part of an integrated reform effort that focuses on prevention and addresses the safety of foods produced domestically and imported, with additional rules to be published shortly.
The first rule proposed today would require makers of food to be sold in the United States, whether produced at a foreign- or domestic-based facility, to develop a formal plan for preventing their food products from causing foodborne illness. The rule would also require them to have plans for correcting any problems that arise. The FDA seeks public comment on this proposal. The FDA is proposing that many food manufacturers be in compliance with the new preventive controls rules one year after the final rules are published in the Federal Register but small and very small businesses would be given additional time.
The FDA also seeks public comment on the second proposed rule released today, which proposes enforceable safety standards for the production and harvesting of produce on farms. This rule proposes science- and risk-based standards for the safe production and harvesting of fruits and vegetables.
The FDA is proposing that larger farms be in compliance with most of the produce safety requirements 26 months after the final rule is published in the Federal Register. Small and very small farms would have additional time to comply, and all farms would have additional time to comply with certain requirements related to water quality.
“The FDA knows that food safety, from farm to fork, requires partnership with industry, consumers, local, state and tribal governments, and our international trading partners,” said FDA Commissioner Margaret A. Hamburg, M.D. “Our proposed rules reflect the input we have received from these stakeholders and we look forward to working with the public as they review the proposed rules.”
Before issuing the two rules, the FDA conducted extensive outreach that included five federal public meetings and regional, state, and local meetings in 14 states across the country as well as making hundreds of presentations to ensure that the rules would be flexible enough to cover the diverse industries to be affected. The FDA also visited farms and facilities of varying sizes.
“We know one-size-fits-all rules won’t work,” said Michael R. Taylor, the FDA’s deputy commissioner for foods and veterinary medicine. “We’ve worked to develop proposed regulations that can be both effective and practical across today’s diverse food system.”
Additional rules to follow soon include new responsibilities for importers to verify that food products grown or processed overseas are as safe as domestically produced food and accreditation standards to strengthen the quality of third party food safety audits overseas. Improving oversight of imported food is an important goal of FSMA. Approximately 15 percent of the food consumed in the United States is imported, with much higher proportions in certain higher risk categories, such as produce. The FDA will also propose a preventive controls rule for animal food facilities, similar to the preventive controls rule proposed today for human food. 

The FDA plans to coordinate the comment periods on the major FSMA proposals as fully as possible to better enable public comment on how the rules can best work together to create an integrated, effective and efficient food safety system.

CBP, Caribbean Border Interagency Group Authorities Seize $29 Million Cocaine Shipment, Arrest 2 Dominican Smugglers

U.S. Customs & Border Protection /

San Juan, Puerto Rico – U.S. Customs and Border Protection (CBP) as part of the Caribbean Border Interagency Group law enforcement authorities, seized over 2,600 pounds of cocaine, a go-fast vessel and detained two Dominican smugglers during an at-sea interdiction Sunday in the Caribbean Sea.

The drug shipment is estimated to have a wholesale value of more than $29 million.

A CBP marine surveillance aircraft detected two men aboard a suspicious 32-foot Cuddy-Cabin power boat Sunday afternoon, approximately 60 nautical miles south of St. Croix, U.S. Virgin Islands.

The U.S. Coast Guard cutter Matinicus interdicted the suspect vessel with the assistance of the CBP aircraft crew, who vectored the cutter to the vessel’s position.

The crew of the Matinicus boarded the interdicted vessel and discovered 40 bales of suspected contraband in plain view in the vessel’s forward compartment. A field test confirmed that the packages contained cocaine. The crew of the Matinicus embarked the two Dominican detainees and 40 bales of suspected contraband, and took the seized vessel in tow.

Monday night, the detainees along with the contraband shipment and seized vessel, were transferred to CBP field operations officers in Ponce, Puerto Rico, who in turn, transferred custody of the seizure to Immigrations and Customs Enforcement (ICE) - Homeland Security Investigations for further investigation.

The interdiction was a result of a multi-agency law enforcement effort in support of Operation Caribbean Guard.

Operation Caribbean Guard is a Department of Homeland Security multi-agency law enforcement operation to support ongoing efforts in Puerto Rico and the U.S. Virgin Islands being executed under the San Juan Regional Coordinating Mechanism (SJ ReCoM)/Caribbean Border Interagency Group (CBIG).

CBIG was formally created to unify efforts of the U.S. Customs and Border Protection, the U.S. Coast Guard, U.S. Immigration and Customs Enforcement, the United States Attorney‘s Office for the District of Puerto Rico, and Puerto Rico Police Joint Forces of Rapid Action (FURA, for its Spanish acronym), in their common goal of securing the borders of Puerto Rico and the U.S. Virgin Islands against illegal migrant and drug smuggling.

U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.

United States Harmonizes its Threshold Value for Low Value Commercial Shipments with Canada

U.S. Customs & Border Protection /

(January 8, 2013) Washington— The United States Government announced that it is delivering on a key commitment under the U.S.-Canada Beyond the Border Action Plan through the publication of a final rule in the Federal Register titled “Informal Entry Limit and Removal of a Formal Entry Requirement.” The rule increases and harmonizes the value thresholds for expedited customs clearance to $2,500. This change would harmonize the value threshold for both countries, from the current levels of $2,000 in the United States and $1,600 in Canada.

“We are proud to deliver on another Beyond the Border Action Plan commitment,” said Deputy Commissioner David V. Aguilar. “By working together, we are improving processes that will have a direct and immediate impact on both our nations’ economies.”

“The harmonization of the value thresholds for customs clearance for both Canada and the United States will not only facilitate and expedite trade between our countries, but will also facilitate trade from other countries into either Canada or the United States,” said the Honourable Vic Toews, Minister of Public Safety. “Reducing the administrative and paperwork burden on Canadian businesses improves Canada’s competitiveness, especially for our small businesses, which are the backbone of our economy.”

Currently, for any merchandise valued over $2,000, CBP requires importers to provide a surety bond, complete CBP form 7501, and pay a minimum of $25 in Merchandise Processing Fees (MPF). The final rule increases the limit for which merchandise may qualify for an “informal entry,” thereby eliminating the need for a surety bond, expediting the customs clearance process, and reducing the required MPF amount to $2 for electronic filings.

On October 28, 2011, Treasury and CBP published a proposed rule in the Federal Register to amend title 19 of the Code of Federal Regulations to mitigate the effects of inflation and to meet commitments under the Beyond the Border Declaration and Action Plan. The public had sixty days to comment on the proposed rule. The final rule was published in the Federal Register on December 6, 2012 and will go into effect on January 7, 2013.

President Obama and Prime Minister Harper released the Beyond the Border Declaration on February 4, 2011, which articulated a shared vision in which our countries work together to address threats at the earliest point possible while facilitating the legitimate movement of people, goods and services across our shared border. The Action Plan, released in December 2011, outlines the specific steps our countries intend to take to achieve the security and economic competitiveness goals outlined in the Beyond the Border Declaration.

U.S. Customs and Border Protection Agriculture Specialists at the Brownsville Port of Entry Intercept Significant Pests

U.S. Customs & Border Protection /

Brownsville, Texas - U.S. Customs and Border Protection (CBP) agriculture specialists at the Brownsville port of entry intercepted significant pests on two shipments of stainless steel sheets transported on solid wood packaging materials (WPM).

On December 27, CBP agriculture specialists’ examination of two commercial trucks at the Veterans International Bridge cargo lot resulted in the discovery of live wood-boring insects. The insects, whose appearance was consistent with wood-boring Scolytidae sp., were collected from wooden pallets used in the transportation of stainless steel sheets being imported into the United States from Mexico. The collected insects were transported to the U.S. Department of Agriculture (USDA) Plant Inspection Station at Los Indios, Texas for identification. The specimens were confirmed as quarantine significant bark beetles of the Scolytidae family. As a result of this finding, the shipment was re-exported back to Mexico.

CBP agriculture specialists at the Brownsville Port of Entry have discovered live pests of concern multiple times in shipments from various importers. The WPM in all cases displayed the International Plant Protection Convention (IPPC) marking which indicates the pallets have been treated according to international standards. Importers who have made multiple attempts to enter with violative WPM have been penalized.

CBP agriculture specialists working at U.S. ports of entry ensure that cargo and conveyances are not infested with harmful plant pests and diseases that could harm the agricultural crops, plants and trees in the United States. Certain types of word-boring beetles could be devastating to numerous types of trees since they may have no natural predators in this region. Infestation could spread at an alarming rate and conceivably cost million s of dollars and man hours to eradicate.

“Brownsville’s CBP agriculture specialists have intercepted Buprestidae sp., Cerambycidae sp. and Scolytidae sp. types of beetles in their larval stage and have once again protected the Rio Grande Valley’s agriculture industry,” said Michael T. Freeman, Port Director at the Brownsville Port of Entry. Freeman went on to say, “After examining the wood packaging materials even though they were stamped with IPPC markings, our CBP ag riculture specialists discovered multiple pests. This is another great job of protecting our agricultural and forest resources in a continuing fight against the introduction of exotic plant pests and diseases into the United States.”

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