Angela Velasquez
2 min read
An insurance dispute is the latest case to come before the Ethical Denim Council (EDC), the non-profit entity committed to restoring ethical business practices in the denim supply chain.
EDC issued a formal finding against EFT Capital LTD, declaring the export credit insurance company guilty of unethical behavior after it failed to honor an insurance claim from the unnamed supplier “John Denim.”
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The council, made up of four individuals representing academia, the nonprofit sector and the legal field, unanimously concluded that EFT Capital acted unethically by failing to uphold its obligations under the insurance policy related to non-payment by a customer due to bankruptcy proceedings.
“This case reflects a disturbing trend we’re seeing in the industry, companies shirking responsibility and leaving suppliers to bear the financial and emotional burden alone,” said Sharmon Lebby, EDC project manager. “It underscores why the denim sector needs ethical oversight and concrete mechanisms for justice.”
In the claim brought to the EDC, John Denim “asserts that they held insurance coverage through EFT that was intended to cover losses in the event of customer non-payment.” John Denim maintains that, although a legitimate claim was filed, EFT has not honored its responsibilities under the policy and has consistently failed to respond to follow-up communications.
EFT did not participate in the council’s hearing. Without the insurance company present, EDC said it focused on EFT’s conduct from emails, claim documents and the policy agreement. Council members concluded that EFT failed to “keep promises and acted untrustworthily” by failing to pay the insurance coverage on time and allegedly misleading regarding payment status.
Additionally, failing to address the claim, coupled with the lack of communication, was deemed unfair, lacking in respect for the John Denim’s position and losses.
EDC said a key aspect of the case is EFT’s failure to respond to communications and their avoidance of a formal process of arbitration. “EFT took no accountability for the situation, failing to engage or provide any explanation for the non-payment or non-participation,” EDC stated.
Beyond the unpaid claim, the EDC flagged ongoing concerns that individuals associated with EFT may still be soliciting new clients online while avoiding formal accountability. It has recommended that the claimant continue to document EFT’s online activity and explore pro bono legal options for international enforcement.
