Background

The Federal Trade Commission is asking a court to require a U.S. company and its owner to pay civil penalties of over $100,000 to settle a complaint that they violated a “Made in USA” rule that took effect in August 2021.

According to the FTC, the company designs and sells battery products for recreational vehicles, amusement park rides, marine applications, and low-speed electric vehicles. The FTC alleges that since at least 2018 the company has repeatedly represented that its battery, battery module, and battery management system products are all or virtually all made in the U.S., including by labeling them with an American flag image surrounded by the words “Made in U.S.A.,” often accompanied by the statement “Proudly Designed and Built in USA.” These representations appeared on the company’s website, on its social media accounts, and in mail order catalogs.

However, the FTC asserts that all of the company’s battery and battery module products incorporate imported lithium ion cells and all of its battery management systems incorporate significant imported components.

Under the Made in USA Labeling Rule, marketers are prohibited from labeling products as “Made in USA” unless (1) the final assembly or processing, and all significant processing that goes into the products, occur in the U.S. and (2) all or virtually all ingredients or components of the products are made and sourced in the U.S. The rule also requires all “Made in USA” labels appearing in mail order catalogs to be truthful and non-misleading.

The FTC notes that the proposed penalty amount is equal to three times the company’s profits attributable to the illegal activity.

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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