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False Country of Origin Claims Net $110,000 Penalty

Wednesday, April 17, 2019
Sandler, Travis & Rosenberg Trade Report

The Federal Trade Commission reports that a U.S. distributor of water filtration systems has agreed to pay a $110,000 civil penalty to settle charges that it violated a 2017 FTC administrative order by making false claims that imported water filtration systems were made in the U.S. The proposed order, which must be approved by a federal judge, also requires the defendants to notify affected consumers about the case.

In 2017 the FTC alleged that the company deceived consumers with false, misleading, or unsupported claims that its water filtration systems and parts were all or virtually all made in the U.S. when many were either wholly imported or made with a significant number of parts from overseas.

Under an order settling those charges the company agreed not to make unqualified “Made in USA” claims unless it could show that (1) the product’s final assembly or processing, and all significant processing, takes place in the U.S., and (2) all or virtually all ingredients or components are made and sourced in the U.S. The order allowed the company to make qualified “Made in USA” claims (i.e., claims that are limited in scope or applicability) as long as it included a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, or processing. In addition, the company was barred from making any future country-of-origin claims about its products unless it possesses and relies on a reasonable basis for such claims.

However, according to the FTC, the company admitted that it later violated that order by making false claims that its water filtration systems are “designed and crafted in USA,” among other claims.

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