FTC Announces Order & Penalty for False Made In USA Claims

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Jul. 17, 2023
By: Pietro N. Bianchi

The Federal Trade Commission (FTC) made public a complaint and order to a group of clothing accessories companies and their owner for falsely claiming that their products were manufactured in the U.S.A. In the last couple of years, the FTC has promulgated regulations providing better enforcement options. We are now beginning to see the proliferation of these types of actions. The FTC’s announcement summarizes the proposed order, which would stop the companies from making deceptive claims and require payment of a monetary judgment.

According to the FTC, the companies frequently advertised their products as being “Made in USA,” “Hand Crafted in USA,” or “Made in USA from Global Materials” despite being wholly imported, incorporating significant imported components, or failing to be last substantially transformed in the U.S., have principal assembly take place in the U.S., or have substantial U.S. assembly operations. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stated that “‘Made in USA’ means what it says,” and “Falsely labeling products as ‘Made in USA’ hurts consumers and competition, and the FTC will continue to aggressively enforce the law to stop deceptive claims and hold violators accountable.”

The respondents agreed to the FTC’s orders that impose, amongst other things, restrictions on unqualified claims, requirements for qualified claims, requirements for assembly claims, and a monetary judgement of $191,481. These restrictions and requirements will place an added burden on the companies going forward. While doing your due diligence in labeling and origin requirements would be best practice, the heightened restrictions and monetary judgement can be viewed as the path of least resistance for the companies since they agreed to the FTC’s orders.

If you have questions about labeling requirements, origin regulations, or substantial transformation do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.