FTC asked to look into outlet store marketing

Jan. 31, 2014 at 2:44 PM

WASHINGTON, Jan. 31 (UPI) -- Four Democratic members of Congress have asked the U.S. Federal Trade Commission to look into potentially fraudulent marketing practices at outlet stores.

The traditional public understanding about outlet stores is that they are set up by retailers to unload slightly damaged or overstocked items that would otherwise be sold at brand name retail locations, wrote Sens. Sheldon Whitehouse, D-R.I., Richard Blumenthal, D-Conn., and Ed Markey, D-Mass., along with Rep. Anna Eshoo, D-Calif., in a letter to FTC Chairwoman Edith Ramirez.

"Today, however, some analysts estimate that upwards of 85 percent of the merchandise sold in outlet stores was manufactured exclusively for these stores," the letter said.

The problem is that the merchants may be selling lower quality items produced for their outlet stores without the public being properly informed, a notice from Sen. Whitehouse's office said.

"We have no objections to the evolution of the type of merchandise offered at outlets. However, we are concerned that outlet store consumers are being misled into believing they are purchasing products originally intended for sale at the regular retail store," the letter said.

A common practice, the letter said, is for a company to advertise an item available in a brand name retail store next to one sold in an outlet store, even though it may be an apples to oranges comparison, given the outlet store item is not sold in the brand name store anyway, the letter said.

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