Having now turned the page to the back half of 2018, we took a look at how the FTC’s “Made in USA” enforcement is stacking up to prior years. As we previously posted, the FTC made known its intent to prioritize “Made in USA” enforcement in remarks delivered at last fall’s NAD Conference. Year to date, the FTC has settled two cases (Bollman Hat Company and Nectar Brand LLC) and has issued 15 closing letters regarding “Made in USA” claims.
By comparison, there were two settlements and 22 closing letters in 2017. If the current pace continues, the number of closing letters may exceed prior years.
What can we learn from these cases?
- Qualified Claims Must Still Be Substantiated: Most closing letters involve unqualified “Made in USA” claims. However, qualified claims and those involving terms open to interpretation can still be the subject of scrutiny and must still be properly substantiated. Nectar Brands allegedly claimed in promotional materials that its mattresses were “Designed and Assembled in USA,” but the FTC’s complaint alleges that the mattresses were wholly imported from China, with no assembly taking place in the United States. “Crafted in America” was also among the claims that saw enforcement as was “Built in USA.”
- Watch For Disclosure Issues: In addition to labeling wholly imported products as “Made in USA,” the FTC alleged that Bollman Hat Company and its subsidiary licensed the “American Made Matters” seal to any company that claimed it had a United States-based manufacturing factory or one product with a U.S.-origin label, and met several membership requirements, including self-certifying that at least 50% of the cost of at least one of their products was incurred in the United States, with final assembly or transformation in the U.S., and payment of an annual licensing fee of $99. The settlement requires the respondents to engage an independent auditor regarding use of the seal or to clearly and conspicuously disclose that products and services may display the seal based on self-certification.
Importantly, the settlement order does not prohibit use of the “American Made Matters” seal on products that do not meet the FTC’s “all or virtually all” standard. In fact, the settlement doesn’t prescribe the terms by which “American Made Matters” may be used. The concern, rather, appears to have been that consumers would interpret the seal to be based on an independent assessment rather than a self-certification. The settlement also prohibits the Respondents from failing to disclose material connections in conjunction with an endorsement.
- The Lights Are On: Five of the closing letters in 2018 involve LED, neon, or home lighting products. Other products mentioned in closing letters include cabinets, kids’ play systems, pillows, mattress pads, electric bicycles, ergonomic seating products, holiday puzzles, water jet cutting machines, and winches. Didn’t see that last one coming, did you? Year over year, “Made in USA” enforcement consistently encompasses a wide variety of products.
- What to Do: Given that “Made in USA” claims will remain a priority from the foreseeable future, claim substantiation is a key consideration. If you are new to making country of origin claims or just need a refresher, check out our webinar, originally offered in May 2017, called “Buy American, Hire American: Is Your (Or Your Competitor’s) Product Really ‘Made in the USA’?,” for an overview on the substantiation requirements for advertising and the “Buy American” standard that applies to government procurement.