The Federal Trade Commission has finalized an order penalizing a company for falsely claiming that its 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.
According to the FTC, the company at issue made claims that its products are manufactured in the U.S. on its website, social media, and product packaging for about three years. However, the company regularly imported parts from Asia and Europe for its products. In addition, U.S. Customs and Border Protection discovered in shipments from Taiwan assembled products that were already labeled or ready to be labeled as being made in the U.S.
The FTC has now finalized an order that (1) imposes an $872,577 monetary judgment against the company (though due to the company’s financial situation it will only be required to pay $221,386), (2) prohibits it from making unqualified U.S.-origin claims for any product that are not in compliance with the “Made in USA” rule, (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 or 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.
The order also requires the company to (1) identify and notify all consumers who purchased any of its product imported from Taiwan and labeled as “Made in the USA” or “USA” on or after March 1, (2) submit a compliance report within a year, (3) create and retain for five years a variety of records, including those that demonstrate compliance with the order, and (4) and submit additional compliance reports when requested by the FTC.
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