Unlike your garden variety startup, apparel startups have a unique set of legal issues that must be complied with for lawful day-to-day operations. I’m not referring to design issues since clothing has repeatedly been found to be too utilitarian to warrant much, if any, protection.
Rather, I’m referring to the fundamental fashion law issues for startups, which be classified in to 4 different areas under the umbrella known as “Fashion Compliance.” Though each part has its own complexities, the basic areas can be categorized as:
Each of these can be summed up as follows.
Mandatory Labeling: This involves the data elements required to be disclosed on the garments themselves, whether they are being sold or merely offered for sale (i.e., unsold inventory just sitting on your store shelf or website), the placement of such labels, and the languages and symbols used to convey such required information.
Testing and Record Keeping: Due diligence is required to ensure that garments are made up of the materials they are claimed to be, will not catch on fire at a certain ignition level, and are free from pollutants that can cause injury. To substantiate your business’ representation that your garments are legitimate, testing is required. Record keeping across the board, not only for test results, but also depending on what else your startup is involved in, other records will also be subject to the government’s mandated record’s maintenance. If you haven’t been “that organized” in the past, now is the time to do so.
Marketing Issues: ASK – “Can I really say that about my product?” The use of truthful and non-deceptive product claims are highly policed, and beyond this, there are required marketing disclosures that must be made about wearing apparel when advertised online via your website or when in a catalog. As most marketing statements are optional, a flag should go up each time you make a representation about your product to ensure it’s the truth, the whole truth, and nothing but the truth. If it’s not, be sure to add on some language that does actually make it true in order to cover your butt.
Importing and Exporting: This is always the gorilla in the room. “Why?” you may ask? It is because this adds a whole other layer of law that can get complicated fast. The government views your ability to import into the US as a “privilege” – and not a “right.” Therefore, the onus is on you the business owner to have all of your ducks in order when it comes to import compliance. Since US Customs collects duty payments on commercial imports, and such monies make up the federal government’s second largest source of revenue into the government’s pocket after income taxes, they keep a close eye on what imports are coming in, how the merchandise is classified, and how much money they are making by collecting such duty payments.
Money aside, import issues and the startup can also arise in terms of labeling issues, where the clothing manufacturing is done in the US but is made with foreign components.
The good news is that with some understanding of the tariff, it may be possible to modify the design of your product in order to qualify for a duty liability that is lower, and if that didn’t make much sense, the take away is that you end up paying US Customs less money.
For more information on this topic, you can reference my blog post: Online Resources for Fashion Compliance and Fashion Law
*The content in this article should not be considered legal advice nor as creating an attorney-client privilege as between you the reader and the author. If you have questions, consult with your own licensed attorney should be made.