The Federal Trade Commission has finalized an order penalizing a company for falsely claiming that Chinese 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 faced increased demand for its glass measuring cups in the early days of the COVID-19 pandemic when consumer interest in home baking spiked. The company has long used the U.S. origin of its products as a selling point, but by early 2021 it was unable to meet demand with measuring cups produced in the U.S. and therefore shifted production of some of them to China.
However, the company continued to market the Chinese-made products as “Made in USA.” It also continued to publish and disseminate general advertising materials stating or implying that all of its products were of U.S. origin.
The FTC has now finalized a consent order that (1) imposes a $129,416 penalty against the company, (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 submit a compliance report within a year; create (for ten years) and maintain (for five years after record creation) a variety of records, including those that demonstrate compliance with the order; and submit additional compliance reports when requested by the FTC.
This consent order now carries the force of law with respect to future actions and each violation may result in a civil penalty of up to $50,120.
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