The Federal Trade Commission is penalizing a group of clothing accessories companies for falsely claiming that products were made in the U.S.
The FTC’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, the companies at issue have frequently advertised their products as being “Made in USA” or “Hand Crafted in USA” in their marketing and sales materials when in fact those goods were wholly imported or incorporated significant imported components. The companies also allegedly sold certain belts labeled as “Made in USA from Global Materials” when they consisted of belt straps imported from Taiwan with buckles attached in the U.S.
A proposed consent order (1) imposes a $191,481 monetary judgment against the companies, (2) prohibits them from making unqualified U.S.-origin claims for any product that are not in compliance with the “Made in USA” rule, (3) requires the companies 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 or components, or processing, and (4) requires the companies 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.
If the consent order is finalized it will carry the force of law with respect to future actions and each violation may result in a civil penalty.
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