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False “Made in USA” Claims Settled with No Fine

Tuesday, October 29, 2013
Sandler, Travis & Rosenberg Trade Report

The Federal Trade Commission has voted to accept a consent order settling charges that a Utah company falsely claimed that some of its outdoor accessories were made in the U.S. The company, which sells iPhone accessories, bottle holders, lens cleaners, dog collars and leashes, and other items through its own Web site as well as through online retailers, was charged with claiming that its products were all or virtually all made in the U.S. even though they contained substantial foreign content. Under the FTC’s 1997 U.S. Origin Claims Enforcement Policy Statement, for a product to be advertised or labeled as “Made in the U.S.A” it must be “all or virtually all” made in the U.S.; i.e., all significant parts and processing must be of U.S. origin and the product should contain no (or negligible) foreign content.

According to the FTC, the proposed consent order:

- prohibits the company from claiming that any product it sells is made in the U.S. unless that product is all or virtually all made in the U.S.;

- prohibits the company from making any misleading claims about a product’s country of origin and from providing deceptive promotional material to third-party retailers or otherwise providing the “means or instrumentalities” for others to make deceptive U.S.-origin claims; and

- requires the company to contact all distributors who bought or received products between Jan. 1, 2010, and May 1, 2013, and provide them with a notice and a copy of the order.

The FTC will accept comments on the proposed consent order through Nov. 21, after which it will decide whether to make the order final. A final order would carry the force of law with respect to future actions and each violation of such an order could result in a civil penalty of up to $16,000.

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