When it comes to the Vermont name, let the buyer beware

BURLINGTON, Vt. (WCAX) - What is the value of the Vermont brand? Does the cachet of the Green Mountain State in a company’s name bring in more business? And just who is allowed to use the Vermont name? When it comes to using Vermont in a company or product name, you might be surprised to learn that there are not many legal requirements. And the values consumers typically associate with the name might not necessarily be reflected in the product. Reporter Ike Bendavid dug into a company many Channel 3 viewers may be familiar with, but found their product appears to have little connection to Vermont.

Watching the Channel 3 News, you might have seen commercials for the Vermont Pillow Company.

“I’ve designed the perfect pillow to provide you the best night’s sleep you have ever experienced - guaranteed. We are right here in Vermont and teamed up with Vermont Manufacturing Services,” Owner/pitch-man Noah Zatzkin says in the commercial.

That advertisement led Randolph resident Diane McElhiney to purchase two Vermont Pillows which are advertised to be “as cool and comforting as the mountain air.” “Seeing the commercial and seeing that we have a local company, we try to think local, buy local,” McElhiney said.

When the pillows arrived in the mail, that excitement turned into disappointment. “Suspicious and also learning towards - this isn’t what it appeared to be,” McElhineysaid. When she looked at the manufacturer label, she saw that it was made in China for CVB Inc. in Utah. A web search revealed that CVB Inc. is doing business under the name of Malouf. “It was anger, because what are we actually paying for.”

McElhiney also thought it was strange that a product meant to provide comfort for your head had a very uncomfortable patch on one corner. When she removed the patch containing the Vermont Pillow logo, she found another logo underneath. That logo belonged Malouf, which sells identical pillows under its own brand name. McElhiney said that to her, it was clear the “Vermont company” was buying the pillows from Malouf, slapping on their own logo, and then reselling the pillow at a higher price. Vermont Pillow Company lists the Pow Pow Pillow at $84.95 online while Malouf lists the identical Gelled Micro Fiber for $60. “Not really adding any value other than ironing on a patch,” McElhiney said.

Under the “about us” section of the Vermont Pillow Company website, they confirm that the pillows are manufactured in China, but there is no mention of the Utah company. After speaking with McElhiney, we purchased our own pillows and confirmed Mcelhiney’s discovery about the pillows.

The Vermont Pillow Company lists an address just off Route 7 in Rutland, but there’s no signage or even an office. It’s actually home to an e-commerce and fulfillment service called Vermont Manufacturing Services. “We act as a warehouse for anybody, but we don’t have a website for our customers to sell through. They do their own sales and we fulfill for them,” explained the company’s owner, Jessica Dambarckas. She says the growing business works with national and international companies including Vermont Pillow. Workers take the shipments of Malouf pillows and repackage them as Vermont Pillows. “We do put a patch on it. We do bag them, we do check them for quality to get them out the door for customers.”

We took the two pillows we ordered to Benjamin Varadi, a business law professor at Vermont Law School, to find out whether Vermont Pillow is following state law. “From a legal perspective as to the issue of whether it’s called the Vermont Pillow Company, it probably does meet the standard. It would be different -- and it’s important to your viewers to understand -- if they were claiming that the product was made in Vermont,” Varadi said. He points to the Vermont Origin Rule that has been in effect since 2006 and spells out when a company can and cannot use the word Vermont in marketing its products. The idea is to essentially protect consumers from deception for folks who want to benefit from an association with Vermont as a state and as a culture.”

The Vermont origin rule states that an item has to be “substantially transformed in Vermont” and has to “discharge substantial functions” within the state to make the Vermont claim. Varadi says it could be up to interpretation whether having a physical address here and performing warehouse and shipping activities are enough to satisfy the rule. “Both the rule and Attorney General guidance on this is a little vague. Essentially, they say substantial functions don’t include only mail handling, only billing, even having sales staff in the state may not rise to that standard, but they don’t actually say what the standard is,” Varadi said.

As for placing the Vermont Pillow label over another label, Varadi says that practice may be more common than you think. “It’s important to understand that sophisticated re-labeling is really much a part of our culture. If you are shopping at Trader Joe’s or you are buying products from Amazon Basics, they are certainly not making those products themselves,” he said.

But for consumers like Mcelhiney, there is perceived value in the Vermont brand. It’s what convinced her to buy the pillows in the first place. “It’s a privilege and really a right for them to use the Vermont name,” she said.

So why is that? Why are consumers attracted to Vermont-branded products and why do businesses want to capitalize on the name? “We are known for quality ingredients and quality products. But it’s also that you get to take home a little bit of Vermont back with you,” said Jane Kolodinsky, chair of the Community Development and Applied Economics Department at the University of Vermont. She helped write the Vermont Origin Rule and says Vermont’s reputation for open landscape and clean air is a selling point. “Vermont has the cachet and people are willing to pay more.”

We looked at some other products with Vermont in their name to see if they comply with the Vermont Origin Rule. Darn Tough has Vermont on its logo. The Northfield company says while it sources materials globally, it owns the manufacturing process from beginning to end, which happens entirely in Vermont. Vermont Teddy Bear says over 80% of their products are made at their Shelburne factory while less than 20% are made overseas. And Vermont Flannel says 70% of its products are made in Johnson and East Barre while the rest are made elsewhere in the U.S.

At the end of the day, experts say it’s up to the consumer to be aware of what they are buying and what value they put on the label. “Is it just puffery, where the average consumer knows that it’s not possibly real, or is it actually deceitful and not actually transparent and clear that that’s what the product means,” Kolodinsky said.

“I think the consumer can take home a lesson from this -- about being careful of where exactly their products are being manufactured regardless of what the company name may be,” Varadi said.

Malouf, the Utah company that produces the pillows, says their products are sold in 16,000 retail locations and they were surprised to learn they were being re-branded as Vermont Pillows. Malouf also directly disputes Vermont Pillow owner Noah Zatzkin’s claim that he designed the pillows, both possible violations of state and federal consumer protection laws.

The Vermont Attorney General’s Office said they have received no complaints about Vermont Pillow and declined a request for an interview.

Noah Zatzkin declined multiple requests for an interview. He did say the pillows are not selling well and that they plan to shut down operations at the end of the holiday season. As of Tuesday, the Vermont Pillow website was shut down.

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