A new Federal Trade Commission rule seeks to crack down on what several commissioners said is “rampant Made in USA fraud” that has been enabled by a quarter-century of “highly permissive” FTC policy “where violators faced essentially no consequences whatsoever.”
Under this rule, which will take effect 30 days after its publication in the Federal Register, marketers will be prohibited from making unqualified “Made in USA” claims on labels unless (1) final assembly or processing of the product occurs in the U.S., (2) all significant processing that goes into the product occurs in the U.S., and (3) all or virtually all ingredients or components of the product are made and sourced in the U.S. The rule’s definition of “label” extends beyond labels physically affixed to a product and may include labels appearing online.
The FTC states that this rule does not impose any new requirements on businesses but instead codifies the commission’s longstanding enforcement policy statement regarding U.S.-origin claims. This codification will allow the FTC to pursue a broader range of remedies for violations, including the ability to seek redress, damages, penalties, and other relief from those who lie about a “Made in USA” label. For example, the FTC will for the first time be able to seek civil penalties of up to $43,280 per violation.
The FTC notes that this rule applies only to labeling claims and does not supersede, alter, or affect any other federal statute or regulation relating to country-of-origin labels.
For more information on “Made in USA” labeling requirements, please contact attorney Elise Shibles at (415) 490-1403 or via email.
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