Background

The Federal Trade Commission reports that a U.S. company and its owner will pay $753,000 to settle FTC charges that they made false, misleading, or unsupported advertising claims that their imported mattresses were made from 100 percent U.S.-made materials. The FTC called the company a “repeat offender” because one of its subsidiaries resolved similar charges in 2018.

“Unfortunately, we see too many repeat offenders,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, “but thanks to the FTC’s recently finalized Made in USA Labeling Rule, companies that abuse these labels will face civil penalties in addition to other relief. We will not hesitate to seek strong penalties against Made in USA fraud.”

While the company and its owner claimed in its promotional materials that their mattresses were “proudly made with 100 percent USA-made premium quality materials,” the FTC said these mattresses are actually finished overseas and, in some cases, are wholly imported or use significant imported materials.

A proposed new order that incorporates the terms of the 2018 order and expands its application to all entities under the owner’s control includes the following provisions.

- prohibits the company and its owner from making unqualified U.S.-origin claims (those made with no limitations) for any product unless they can show that (1) the product’s final assembly, final processing, and all significant processing takes place in the U.S. and (2) all or virtually all ingredients or components of the product are made and sourced in the U.S.

- provides that for any qualified Made in USA claims (those that include explanatory information) a clear disclosure must be provided about the extent to which the product contains foreign parts, ingredients, components, or processing

- provides that if the company wants to say a product is assembled in the U.S. it must ensure it is last substantially transformed in the U.S., that its principal assembly takes place in the U.S., and that U.S. assembly operations are substantial

- requires the company to notify affected consumers about the FTC’s order and submit compliance reports

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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