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.