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this post was submitted on 28 Apr 2024
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The bottom line is operating income, not revenue. And WSM had an operating income of ~$1.5 billion last year.
The FTC found seven products were falsely advertised, starting with a mattress cover. But Pottery Barn sells over 10,000 products, in fact there are over 500 products in their bedding section alone. And Pottery Barn is just one part of WSM.
It's near certain that a $3 million fine wiped out whatever profit these seven products made for WSM, and then cut into profits made by other products. So breaking the law was not a profitable strategy for WSM.
The punishment should be calculated based on gross revenue from the product. Not net profit. 50% of gross revenue sounds good.
Of course 50% of gross revenue would immediately bankrupt WSM.
But if you still think that's an appropriate deterrent, what if we imposed the same penalty on cannabis dispensaries? After all, they are not simply violating FTC regulations, they are engaged in federal felonies.
If punishment are severe then the corporations would look twice before committing fraud and deception. If not it's just another slap on the wrist
I think a fine of $3 million is more than a slap on the wrist. It's a lot more than whatever benefit WSM got from "made in the USA" labels.
That's the problem the companies don't fear the consequences for their action. If the fine was huge enough to bankrupt a company. Then the other companies will take a second guess before committing any fraud or deception against the consumers like you and me.