Retail Fraud Fiasco
Mega-retailers Target, Walmart and Bed, Bath & Beyond have found themselves in a bit of hot water after being accused of selling fake ‘Egyptian’ cotton. C’mon really?
A federal judge has put the three miscreants in the firing line for misrepresenting their products as 100% Egyptian cotton when in fact its origins are most likely some distance from there. Egyptian cotton is distinctive thanks to its long fibers which provide silkier, softer and more robust fabrics, making them….You guessed it, pretty expensive.
This has lead to the court ruling that buyers had been overcharged for the sub-par product sold to them, making the companies liable for breach of warranty and negligent misrepresentation. While the retailers narrowly avoided allegations of fraud, Indian textile company, Welspun, was not so lucky.
All three companies were said to have known about the cotton’s falsely advertised origins for at least three years, with Walmart having known as early as 2008. Although they all severed ties with Welspun by the end of 2016, enough damage has been done for consumers to dredge up the past and seek legal action against them.
The impact has yet to find its way into the companies’ stock prices, but an expensive penalty or prolonged legal battle could do a fair amount of damage if things get nasty. Stay tuned!
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