Mercury News - Eshoo, senators urge FTC probe of outlet stores
February 4, 2014
In The News
By Josh Richman
Rep. Anna Eshoo and three other members of Congress want a federal investigation of whether outlet stores are engaging in misleading marketing practices.
In a letter sent Thursday to Federal Trade Commission Chairwoman Edith Ramirez, Eshoo, D-Palo Alto, and U.S. Senators Sheldon Whitehouse, D-R.I.; Richard Blumenthal, D-Conn.; and Ed Markey, D-Mass., urged a probe into whether companies sell lower-quality items produced specifically for outlet stores without properly informing consumers about the difference between those items and the higher-quality products found in regular retail stores.
“Historically, outlets offered excess inventory and slightly damaged goods that retailers were unable to sell at regular retail stores,” the lawmakers wrote. “Today, however, some analysts estimate that upwards of 85 percent of the merchandise sold in outlet stores was manufactured exclusively for these stores. Outlet-specific merchandise is often of lower quality than goods sold at non-outlet retail locations. While some retailers use different brand names and labels to distinguish merchandise produced exclusively for outlets, others do not. This leaves consumers at a loss to determine the quality of outlet-store merchandise carrying brand-name labels.”
The lawmakers cite news reports estimating the nation’s more than 300 outlet malls were expected to generate $25 billion in sales last year.