Just months after the previous record was broken, the largest-ever civil penalty for falsely labeling goods as being made in the U.S. has been assessed on a two-time violator.
The Federal Trade Commission’s “Made in USA” rule prohibits marketers 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. Qualified “Made in USA” claims may be made if the extent to which the product contains foreign parts, ingredients, components, and/or processing is clearly and conspicuously conveyed, and claims that goods are assembled in the U.S. may be made if the product is last substantially transformed in the U.S., the product’s principal assembly takes place in the U.S., and U.S. assembly operations are substantial.
According to an FTC press release, a U.S. company has agreed to pay $3.175 million for multiple violations of the “Made in USA” rule. For example, the company advertised certain goods as “crafted in America from domestic and imported materials” when in fact they were wholly imported from China. The FTC also identified other products that were either wholly imported or contained significant imported content but that the company advertised as being made in the U.S. without the required disclosures.
These actions violated not only the “Made in USA” rule but also a 2020 FTC order requiring the company to halt similar deceptive claims. In fact, the FTC said, at least three of the company’s products were deceptively marketed as “Made in USA” when the company submitted its report on compliance with the 2020 order.
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