Boohoo lands itself in hot water for product labelling mishap
The BBC has recently reported that fast-fashion chain, Boohoo, mislabelled potentially thousands of clothes as being “Made in the UK” when they were in fact made in South Asia (namely Pakistan and other countries). The incident occurred at Boohoo’s Leicester factory, opened to promote end-to-end garment production in the UK, and resulted in labels on certain items being removed and replaced with new labels incorrectly stating that the products were made in the UK. Boohoo has said that the incorrect labels were due to “human error” and a “misinterpretation” of the labelling rules, yet no further explanations have been given. Whilst the errors have been described as an “isolated incident” and steps have reportedly been taken to ensure that this does not happen again, it is understood that there has been no product recall.
Is there an obligation to specify country of origin on garments?
Whilst the Textile Products (Labelling and Fibre Composition) Regulations 2012 (the Textile Products Regulations) require all textile products to carry a label indicating the fibre content, these Regulations do not require in the UK (unlike for food products) an inclusion of the country of origin on textile products. This is unless, without such information, the consumer would be misled as to the true geographical origin of the garment. That said, both manufacturers and retailers are responsible for complying with labelling requirements and if a decision is made to include the country of origin on a product (as Boohoo has done here), then the label cannot mislead the consumer as to the country of origin.
What are the potential legal ramifications?
Trading Standards (who would generally be responsible for enforcing any breach of regulation) has commented that replacing country of origin labels in this way was incorrect and could potentially mislead thousands of consumers as to the geographical origin of garments that they are buying. In this case, whilst the Textile Products Regulations are unlikely to come into play, the Consumer Protection from Unfair Trading Regulations 2008 (the Consumer Trading Regulations) could apply if it has been found that the “Made in UK” labelling error was a misleading action. The Consumer Trading Regulations generally apply to “business to consumer” practices, but can also catch “business-to-business” practices that could affect consumers. They impose a general prohibition on traders in all sectors from engaging in unfair commercial practices with consumers. Specifically, they protect consumers from unfair or misleading trading practices and ban misleading omissions and aggressive sales tactics, in line with an obligation to trade fairly and honestly with consumers. Generally, a misleading action or omission occurs where information (or the omission of information) informs or gives an overall impression that deceives or is likely to deceive the average consumer about products, including their main characteristics, risks and nature, and the consumer takes a different transactional decision as a result. Similarly, there may be breaches of the Consumer Rights Act 2015 which provides that all terms in a consumer sale contract must be transparent. Typical civil redress here might be damages, for example a reduction in price.
Whether consumers have been misled in this case at the point of purchase of Boohoo products remains to be seen. However, the presence of a UK factory was designed to promote garment production in the UK. Location of production could influence consumers’ buying decisions and so it is important that companies with trading operations in different jurisdictions are transparent about where garments are manufactured and/or assembled.
In reality, unless there is further investigation and the results of which are made public, it is likely to be difficult to unpick exactly what has happened and redress (either by way of criminal prosecution, civil action or enforcement by trading standards for misleading consumers) could be unlikely. The exact risk to Boohoo will depend on factors specific to each error (for example, popularity of product, consumer reaction and market scrutiny), although Trading Standards may still step in to find other ways to enforce or control seemingly unfair practices.
What are the wider implications?
From a business perspective, there are questions to be answered as to how the purported error occurred and what steps are being taken to ensure it does not happen again. This case demonstrates the importance of educating a business on the precise legal requirements for product labelling and then having sound inspection procedures within the supply chain in place to ensure that products are labelled correctly. If they are found not to be, further procedures should be in place to trigger a complete product recall for further inspection or a removal of any isolated errors from the system. Without such procedures, the ramifications for a business from both a financial and reputational perspective are potentially great. The industry is currently flooded by wider policy and regulation and there is greater public scrutiny of “fast fashion” and what that entails, particularly when issues such as workforce practices, ethical supplier compliance and sustainability are at play.
Enhanced enforcement powers on the horizon
Currently, the Competition and Markets Authority (CMA) has responsibility for enforcing consumer law by bringing civil or criminal actions in courts. However, the introduction of the Digital Markets, Competition and Consumers Bill into Parliament, if enacted, will allow the CMA to impose fines directly without the need to go to court in certain cases. Where the CMA concludes there has been a breach, it will have the ability to directly impose fines of up to 10% of global turnover on businesses. In addition, it will have the power to impose “enhanced consumer measures” in response to breaches of consumer protection law, for example by ordering businesses to compensate for harm suffered or to allow the early termination of contracts. It is yet to receive Royal Assent, but it is expected to be enacted in 2024. Assuming it comes into force, it is likely to change the consumer protection landscape considerably by opening the doors to a greater level of investigation and ultimately, fines for offending businesses and individuals.
