We are writing to let you know about increased enforcement activity at the federal level related to “Made in USA” claims.
In the past few weeks, the Federal Trade Commission (FTC) has resolved two administrative complaints filed against U.S. companies for allegedly making false U.S.-origin claims.
In February, the FTC published an agreement containing a consent order involving a water filtration company based in Georgia. The FTC’s complaint alleged that the company deceived its consumers with claims that its systems and parts are “Built in USA”, “Proudly Built in the USA” and “Built in USA Legendary brand of water filter” when in fact the company either imported its products or built them using significant imported components.
Similarly, earlier this week, the FTC published an agreement containing a consent order involving a Texas company that sells metal pulleys for industrial use. The complaint alleges that the company advertises its products online, in stores, at trade shows, through social media, etc. and uses unqualified U.S. origin claims, such as “Made in USA”, “Made in the USA American Product” and graphical depictions of the American flag, on the product and in its advertising. The FTC alleged that many of the company’s products contained significant imported components (and some of the parts were imported from abroad already stamped “Made in USA”).
Without admitting wrong-doing, both companies agreed to enter into consent orders with the FTC to resolve the matters. These orders mandate compliance with the FTC’s Enforcement Policy Statement on U.S. Origin Claims going forward, and include certain reporting and recording requirements. Each consent order remains in effect for 20 years. Violations of the consent orders lead to significant monetary fines. Additional information about each case can be found here and here.
These actions are important, as they may signal increased enforcement of this issue at the federal level. As you know, the FTC has adopted strict guidelines for making unqualified U.S.-origin claims – the ‘all or virtually all’ U.S. content standard. In recent years, however, there has not been a great deal of enforcement at the federal level. These actions may signal that this will be changing. Accordingly, every company should review its product markings, as well as its advertising (including social media), to make sure that any U.S.-origin claims (unqualified or qualified) comply with the FTC’s guidelines. If your claims are in compliance, you should also consider reviewing the types of claims your competitors are making to help ensure there is a level playing field for everyone.
We regularly advise clients on these issues (and have represented companies in FTC enforcement actions) and would be happy to discuss this with you further. If such a discussion would be helpful, just let us know.
We hope this is helpful.