Background

A tractor manufacturing company has agreed to pay the largest ever civil penalty in a “Made in USA” case for falsely labeling some of its replacement parts as being made in the U.S.

The Federal Trade Commission’s “Made in USA” rule, which took effect in August 2021, 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. The rule also requires all “Made in USA” labels appearing in mail order catalogs to be truthful and non-misleading. Violators may be subject to civil penalties.

According to the FTC’s complaint, since at least 2021 this company labeled thousands of replacement parts for its tractors and other agricultural equipment as “Made in USA” even though they were made entirely overseas. In addition, after the company moved manufacturing for some parts to other countries it failed to update the products’ labeling to reflect that change, leaving them labeled as “Made in USA”.

A stipulated order (1) imposes a $2 million civil penalty against the company; (2) prohibits the company from making unqualified U.S.-origin claims for any product unless it can show that the product’s final assembly or processing – and all significant processing – takes place in the U.S., and that all or virtually all ingredients or components of the product are made and sourced in the U.S.; (3) requires the company to include in any qualified “Made in USA” claims a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, components, or processing; and (4) requires the company to ensure, when claiming a product is assembled in the U.S., that it is last substantially transformed in the U.S., its principal assembly takes place in the U.S., and U.S. assembly operations are substantial.

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