Sunday, September 26, 2021

FTC Order Requires Company and Its Owner to Pay $146,249, and Stop Making Deceptive ‘Made in USA’ Claims

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Richard B. Newmanhttp://www.hinchnewman.com
Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

The Federal Trade Commission recently announced that a company that sells customizable promotional products such as wristbands, lanyards, temporary tattoos, and buttons, and its owner, will settle FTC charges that they made false, misleading, or unsupported advertising claims that their products were all or virtually all made in the United States.

The settlement requires the company and its owner to pay a monetary judgement of $146,249.24.

According to the administrative complaint, the FTC alleges that, as the company’s sole officer and shareholder, the owner created all content and approved all changes to the website, approved all of the company’s social media content, and created and approved its YouTube content.

“This should be obvious, but you can’t say your products are made in the USA when most of them are made elsewhere,” said FTC lawyer Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection. “When companies … make this false claim, they hurt both people who want to buy American and companies that really do make things here.”

The complaint alleges that, since at least 2012, the company and its owner have violated the FTC Act by claiming on their website that the products they sell are made in the United States, when in fact in numerous instances the products are wholly imported from China.  On the website, price lists, Facebook header, and in a promotional YouTube video, according to the FTC, the company and its owner claim that products are “Made in USA,” “USA MADE,” and “Manufactured Right Here in America!”

Under the terms of the proposed order, the company and its owner are prohibited from making unqualified U.S.-origin claims for any product, unless they can show that the product’s final assembly or processing—and all significant processing—takes place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States.  Under the order, any qualified Made in USA claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing.  Finally, to claim that a product is assembled in the United States, the company and its owner must ensure that it is last substantially transformed in the United States, its principal assembly takes place in the United States, and U.S. assembly operations are substantial.

The order prohibits the company and its owner from making any country-of-origin claim about a product or service unless the claim is not misleading and they have a reasonable basis that substantiates their claim.  It also requires the company and its owner to provide compliance reports.

The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides further guidance on making non-deceptive “Made in USA” claims. 

Richard B. Newman is an advertising practices attorney at Hinch Newman LLP.

Attorney advertising. Informational purposes only. Not legal advice.

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