By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

When I’m in India, people often ask me to vet their textile purchases after the fact. They often brag that their newfound treasure is 100% pashmina or “organic cotton” – and quote a price paid that’s too good to be true. Guess what? It’s indeed too good to be true.

When one purchases jewellery from a reputable Indian jeweller, s/he’ll tell you exactly how much the piece weighs. So, if it’s supposed to be 18K gold, and the cost you’ve paid is less than the market price for that amount of gold, there’s a simple conclusion to be drawn. The piece may may be a beautiful, but it ain’t 18K gold.

The same logic applies to textiles. The price of the final product must exceed the costs of inputs: raw materials and skilled labor. So, what do I do when asked if the person got a good deal? Well, I certainly don’t blurt out the whole truth. No one ever wants to hear s/he’s been ripped off. What I do say is: what a lovely piece? Do you like it? And then riff onward from there.

If, however, someone asks me outright where to go to buy quality textiles, I first ask them what they’re looking for, and I try and tease out a budget. That information gives me an idea where I should direct them. For those looking to make a high-end purchase – pashmina, for example – I’ll steer them to one of three three family textile businesses. Over the last decade or so, I’ve been a guest of each family, either in Jaipur and Srinagar , in some cases making many visits. I’ve visited workshops, traveled with family members, met their weavers, and even bought some of their products.

People new to buying pashmina are unlikely to pick out the good stuff. How do I know? Because when I first started buying textiles, I got ripped off too. I trusted my fingers and bought “pashmina” that felt sumptuous. I know now that however it was described, what I actually eceived was usually a 90% silk/pashmina mix, which feels softer than pure pashmina. Was I particularly credulous? Perhaps. Once one knows what quality raw material costs and appreciates what high-skilled labor is necessary to fashion a piece, one can roughly calculate when a price is indeed too good to be true. I didn’t, and I overpaid for my ignorance. By paying too little outright, I received even less in return.

I don’t feel abashed about confessing my mistakes. I know for a fact when a company well-known for its premium pashmina sends buyers to source textiles from one of the three families mentioned above – and which are then sold under its exclusive brand name – that company insists on DNA tests to confirm that what’s being sold is indeed what’s claimed to be on offer.

Misrepresentation and outright fraud have been a problem in the pashmina market for centuries. Today, more “pashmina” is sold each year than is actually produced. Not to mention that lower-quality Chinese or Amritsari fiber is passed off as the most coveted hands- on, handwoven Kashmiri variety.

Call for a Consumer Class Action

Leaving aside the pashmina market for the moment, the Gray Lady yesterday woke up to the problem of ordinary textiles masquerading as something special in the burgeoning organic cotton market (see That Organic Cotton T-Shirt May Not Be as Organic as You Think):

Michael Kors retails its organic cotton and recycled polyester women’s zip-up hoodies for $25 more than its conventional cotton hoodies. Urban Outfitters sells organic sweatpants that are priced $46 more than an equivalent pair of conventional cotton sweatpants. And Tommy Hilfiger’s men’s organic cotton slim-fit T-shirt is $3 more than its conventional counterpart.

“This product contains independently certified organic cotton grown without chemical pesticides, chemical fertilizers and genetically modified seeds,” the product description reads.

With the fashion industry trumpeting its sustainability commitments, those labels are both a means of value signaling and a lure to consumers willing to pay more to act better.

There’s only one problem: Much of the “organic cotton” that makes it to store shelves may not actually be organic at all.

That’s a problem. I wondered whether the remedy outlined above – purchase your t-shirts only from reputable suppliers – might scale up to the much larger, fragmented world-wide market for cotton. Where, as in the pashmina market, fraud and misrepresentation is also rife. Per the NYT:

The largest single producer of the world’s organic cotton supply is India, which accounts for half of the organic cotton sold globally, and where the organic cotton movement appears to be booming. According to Textile Exchange, a leading organic proponent, organic cotton production in India alone grew 48 percent in the last year, despite the pandemic.

However, much of this growth is fake, say Indians who source, process and grow organic cotton.

At the heart of the problem is an opaque certification system rife with opportunities for fraud. Consumers are assured of “organic” material by brands, which rely on official stamps of approval from external organizations. Those in turn rely on reports from opaque local inspection agencies that base their conclusions on a single planned yearly inspection (in the case of the facilities) or a few random visits (for farms).

In recent months, the credibility of these inspection agencies has been destroyed. In November, the European Union voted to no longer accept Indian organic exports certified by the main companies responsible for organic cotton: Control Union, EcoCert and OneCert. And in January, the international agency that provides accreditation to organic inspection agencies, IOAS, withdrew OneCert’s ability to inspect and certify cotton processors for these labels

The NYT does a good job in outlining problems. But it essentially throws up its hands and surrenders without offering clear solutions, I think because it’s not examining the problem properly.

Here, entrepreneurial US class action lawyers might prod companies to ensure customers either receive organic cotton, or instead don’t pay an organic premium for ordinary cotton.

US states have on their books statutes which protect consumers from companies engaging in unlawful or deceptive practices. They also provide for private rights of action – eg, lawsuits – to enforce consumer protection objectives. States also allow individuals to band together and bring class action lawsuits .

Note that the pleading standard for pursuing such certified class actions is fairly loose. The entire game here is get a judge to certify a class in order to pursue a class action. If potential plaintiffs can get a class certified, they have an excellent chance of forcing companies to agree a settlement. Few defendants would want to see a class action go to trial, a process that’s expensive and where the outcome is uncertain.

In a potential class action in the organic cotton realm, plaintiffs might allege that they bought organic cotton, and were sold a non-organic product. The damages a class might win could be substantial, based on the difference between the price of ordinary cotton products and organic ones, plus potential punitive damages.

Companies that currently sell “organic cotton” would be left with two possible options, going forward. One trail has been blazed by Eileen Fisher, a company that’s long been a leader on fashion sustainability issues (see The High Hidden Costs of Fast Fashion). Eileen Fisher has chosen to cease promoting certified “organic cotton” entirely:

At least one brand has decided it no longer wants to look the other way, however. Though organic cotton used to be a centerpiece of its commitments, the women’s wear brand Eileen Fisher now has a page on its website describing why it is moving away from certified organic cotton, the better to address what the brand calls “an uncomfortable fact.”

“The ‘organic’ cotton that’s sold each year far exceeds the amount that is actually grown,” it says.

The second, more difficult path a fashion company might pursue would be to build relationships with particular farmers, starting from the source, and ensuring that the “organic cotton” they sell is indeed organically grow. Most “organic cotton” grown in India, or in other cotton production centers, including China and Turkey, is anything but and fashion companies must surely be aware of this fact. According to the NYT:

At this point, some industry insiders believe the only way for a brand to ensure its organic cotton is actually organic is to invest in farmers directly through credible organizations before any seed is even sown.

The NYT describes how the current system of organic certification and production has founded, partly because middlemen siphon off excess profits that accrue from selling self-described organic products, rather than passing extra revenues to farmers.

Starting with the source – the organic farmer – and working forward, building verifiable organic cotton supply chains would mean abandoning or at minimum disentangling the complex network of supply chains that currently predominates. And perhaps in this case, India might lose its preeminent position in world cotton production. Indeed, some fashion companies might well choose to source their organic cotton from farmers located closer to the ultimate markets for their textiles and apparel.

Or maybe not. After all, India has been producing and exporting cotton for a very long time. Millenia, as a matter of fact, as mentioned by Herodotus, Cicero, and Pliny the Elder (see, eg, The story of a plant called cotton & a pioneer named India). That tradition won’t simply vanish and fashion companies might find it easier to improve supply chains that start in India rather than build such networks anew.