The Federal Trade Commission has finalized an order penalizing a group of companies for making deceptive claims about their products being 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’s complaint, the companies at issue frequently advertised their products as being “Made in USA” or “Hand Crafted in USA” in their marketing and sales materials when in fact these products were wholly imported or incorporated significant imported components. The complaint also charged that the companies sold belt straps imported from Taiwan with buckles attached in the U.S. as “Made in USA from Global Materials.”
The FTC’s final 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.
The order also requires the companies to (1) identify and notify all consumers who purchased any of their product labeled, advertised, or sold as “made in the U.S.” on or after Jan. 1, 2018, (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) submit additional compliance reports when requested by the FTC.
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