BCBG recalled flammable sweaters in 1996 — then sold 185 of them in 1999

Between August and November 1996, BCBG Max Azria — the Los Angeles fashion house founded by Max Azria, legally AZ3 Inc. of Vernon, California — sold about 3,000 women's chenille sweaters, a 65 percent rayon and 35 percent nylon blend. Under the federal Flammable Fabrics Act standard, CPSC's judgment was blunt: if ignited, they would burn faster than newspaper. In November 1996 BCBG recalled the sweaters in cooperation with the agency.

The recall should have ended with the inventory. Instead, some of it survived. From roughly July through September 9, 1999, BCBG sold 185 of the recalled sweaters — and offered more — at its own employee sales store in Vernon. Selling a recalled product is a separate federal offense, and the company was also required to report those sales to CPSC immediately. It did not. In the fall of 1999 BCBG had to conduct a second recall, of its own product, for the crime of selling it the first time.

In October 2000 CPSC announced a $75,000 civil penalty settling allegations that BCBG violated both the Flammable Fabrics Act and the Consumer Product Safety Act. The settlement, published at 65 FR 56870, was provisional acceptance of a deal in which BCBG denied violating either law. The fashion house put out a third recall notice for the 1999 employee-store stock.

$75,000 CPSC penalty under the Flammable Fabrics Act; 3,000 sweaters recalled in 1996, then 185 more recalled in 1999

The recall was run as a publicity event rather than an asset-destruction operation: leftover units sat in stock and drifted back into a sales channel instead of being certified destroyed.

Employee sales were mentally filed as internal, not commerce. Legally the opposite: every sale of recalled goods is a fresh violation, and the store's own customers were the victims.

Nobody owned the duty to report the resales to CPSC, so what management saw as quietly clearing old stock became a federal case three years after the original problem.

A recall ends when the inventory is destroyed, not when the press release goes out. Stock that survives a recall is a liability in a box — and an employee store is still commerce.

BCBG paid the $75,000, recalled the employee-store stock and denied the violations — and the episode left no visible mark on a brand then expanding worldwide. The debt did. In February 2017 BCBG Max Azria filed for Chapter 11 in the Southern District of New York, listing between $500 million and $1 billion in liabilities, closing about 120 US stores, and taking $45 million in new financing to shrink into wholesale and licensing; Max Azria had stepped down as CEO the year before. The flammable-sweater file remains one of the stranger entries in the agency's enforcement record.