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The Federal Trade Commission (FTC) filed lawsuits against national retailers Kohl's (NYSE: KSS) and Walmart (NYSE: WMT) for engaging in false marketing of rayon textile products.

The consumer protection watchdog is using its Penalty Offense Authority to seek the largest-ever civil money penalty against the retailers for their alleged illegal business practice.

In the separate but similar lawsuits against Kohl's and Walmart, the FTC alleged that both national retailers were falsely marketing dozens of rayon textile products as bamboo.

Additionally, the consumer protection watchdog alleged that Kohl's and Walmart were making deceptive environmental claims. They allegedly falsely touted that bamboo textiles were made using eco-friendly processes.

In their advertisements, both retailers claimed "bamboo-derived" products are produced  "free of harmful chemicals, using clean, non-toxic materials." In reality, the process of producing bamboo-derived products requires the use of toxic chemicals, which result in the emission of hazardous pollutants," according to the FTC.

Furthermore, the consumer protection watchdog alleged Kohl's and Walmart failed to disclose to consumers that their supposed bamboo textiles are actually made of rayon derived from bamboo. The companies' failure is a violation of the FTC Act and the Textile Act and Rules.

FTC's proposed orders against Kohl's and Walmart

The consumer protection watchdog's proposed order for Kohl's and Walmart to settle its allegations includes the following:

Kohl's must pay civil penalties of $2.5 million while Walmart must pay civil penalties of $3 million. The total amount is the largest-ever penalty in this area.

Kohl's and Walmart must also stop violating the FTC's Textile Act and Rules. The companies must also stop making unsubstantiated environmental claims that bamboo or bamboo fiber is produced free of harmful chemicals or non-toxic materials or in a process that is safe for the environment unless they can support their claims.

The companies must stop their marketing claims that a textile product is made of bamboo or bamboo fiber unless that can support it.

In a statement, FTC Bureau of Consumer Protection Director Samuel Levine said, “Kohl’s and Walmart are paying millions of dollars under the FTC’s Penalty Offense Authority for mislabeling their rayon products as bamboo. False environmental claims harm both consumers and honest businesses, and companies that greenwash can expect to pay a price.”

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