Puzzling Mail

I got some strange mail earlier in the week. It was a small postcard apparently from a group of lawyers telling me that I could be reimbursed if I bought towels made by a company called Welspun between the beginning of 2012 and last July, approximately seven and a half years. 

As I looked into it, just out of curiosity, I discovered that Welspun Group is a multinational company founded in India in 1985. It does business in over 50 countries in steel, energy, and textiles, employing about 24,000 people. 

The reason for the settlement is that they have been accused of fraud. According to Fortune, “an internal investigation revealed it misrepresented its 100% Egyptian cotton sheets.” When this came to light, several retailers including Target, Wal-Mart, Bed Bath and Beyond and J.C. Penney either had or was considering severing ties with the company. In addition, two class action lawsuits had been filed.

The postcard must have proceeded from one or both of those lawsuits. It says that the company has set aside $36 million to pay “Valid Claims.” If I have a proof of purchase, I “may receive up to $2.30 for Subject Product towels and pillowcases and up to $9.20” for all other products. Subject products are those labeled as “Egyptian Cotton” or “Pima Cotton.” If I don’t have a proof of purchase, the payments are cut in half.

Again according to the September 2016 Fortune article, “Welspun has committed to implementing new labeling practices.” Furthermore, their website boasts of many quality awards in 2018. So why does the Class Period last until July 2019? I don’t have a clue. The company has also been ordered to clean up their marketing and labeling practices.

Welspun financials show over $100 million net profit in the last 6 months reported, so the settlement shouldn’t be devastating.

After going through all that, I wondered who has really been harmed and what is the value of this entire exercise. Consumer fraud is a bad thing. Ordinarily some government agency would send out warnings or apply fines and require the company to straighten out their practices. In serious cases, some people might go to jail. But does forcing the company to provide the funds so that an administrator can reimburse customers with seven-year-old receipts $2.30 per towel make any sense at all?

 A quick shopping trip on Amazon reveals that 4-packs of 27x54 Egyptian cotton towels are on sale for $43 (regular price $60). A 4-pack of comparable 27x54 luxury towels with the same GSM (grams per square meter) sells for $28. Someone who may or may not be able to tell the difference could have paid $3.75 too much per towel. They now can reclaim some of the difference thanks to $9 million worth of attorney work. The situation is probably the same for sheets.

The whole thing leaves me wondering how expecting Egyptian cotton and getting some other kind of cotton in one’s sheets and towels can mean enough to go through all this trouble. If a company commits fraud, either intentionally or unintentionally, it should be fixed and possibly punished. In large matters consumers ought to be made whole, but for sheets and towels? – Where is the perspective?