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Remedial Actions Avoid FTC Penalties in “Made in USA” Labeling Case

Friday, March 10, 2017
Sandler, Travis & Rosenberg Trade Report

The Federal Trade Commission recently determined not to further pursue a “made in USA” labeling case against a major U.S. retailer after it took a number of remedial steps. The FTC opened this investigation after consumers reported that items prominently marked “made in USA” on their exterior packaging were themselves marked “made in China.”

While the FTC notes that its decision does not mean there was no labeling violation and that it could take further action if necessary, the agency’s letter to the retailer indicates that it looks favorably on the company’s response.

First, the company confirmed and corrected the country of origin information for the identified items as well as several other items the company self-identified. Specifically, the company removed affected items from sales floors, hard-locked them at the point-of-sale system so they could no longer be sold to consumers, and began work to remediate packaging.

Second, the company immediately implemented several longer-term process enhancements designed to prevent inaccurate country of origin claims by company vendors: (1) assembled a cross-functional group of internal experts from the company's packaging team, product safety and quality assurance team, merchant team, and law department to identify where it could make process improvements; (2) began implementing a new flag in the company's packaging system to identify when an unqualified “made in USA” claim is proposed so the company can alert the vendor to ensure the claim meets with FTC guidance; (3) started developing new criteria for third-party testing and assessment labs to follow when an unqualified “made in USA” claim appears on product packaging so they can validate that any tag affixed to the item is consistent with claims made on the packaging; and (4) commenced a larger review of domestic vendors for owned-brand products to conduct additional spot checks of unqualified “made in the USA” claims made within the company’s product assortment.

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