Latest Made in USA Settlement Offers Lessons for Fashion Companies

This week, just a few days before the Fourth of July holiday, the FTC announced a settlement with three fashion companies (that operated together as a common enterprise) over patriotic claims that the companies made about various accessories, such as belts, bags, wallets, and shoes.

Here are a few highlights from FTC’s complaint:

  • The companies made unqualified ​“Made in USA” claims about many of their products. Despite the broad claims, the FTC alleged that many of products were wholly imported or contained significant imported content.
  • The companies made qualified claims that some belts were ​“Made in USA from Global Materials” because they took straps that were made in Taiwan and attached buckles in the US. The FTC alleged the claims were misleading because ​“attaching a buckle to a belt strap is a minimal assembly operation that does not change the name, character, or use of an imported belt strap.”
  • By providing materials with those claims to trade partners, the companies provided the ​“means and instrumentalities” for those partners to commit deceptive acts or practices.

Here are a few highlights from the settlement:

  • The companies are prohibited from making unqualified US-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 US and that all or virtually all components are made and sourced here.
  • If companies make qualified claims, they must include a ​“clear and conspicuous” disclosure – as that term is defined in detail in the settlement – about the extent to which the product contains foreign parts, components, or processing.
  • If the companies make claims about the assembly of a product, they must ensure that the product is last substantially transformed in the US, its principal assembly takes place here, and US assembly operations are substantial.
  • The companies can’t provide materials to third parties that would enable them to make any prohibited claims.

In addition, the companies have to pay a monetary judgment of $191,481 and inform certain customers about the FTC action. This case demonstrates that the FTC continues to take ​“Made in USA” claims seriously. If you make claims about domestic origin, be sure to take a close look at the FTC’s Made in USA Labeling Rule and assess how well you’re complying. In the meantime, enjoy the Fourth of July holiday.