The US Federal Trade Commission (FTC) is intensifying a crackdown on goods that are falsely or misleadingly marketed as “made in the USA.” Since the FTC, in its Made in USA Labeling Rule, 86 FR 27022 (July 14, 2021), 16 C.F.R Part 323 spelled out the standards for making Made in USA claims three years ago, the FTC has increased its level of enforcement activity. In April, the agency imposed a $3.18 million penalty on Williams Sonoma for falsely claiming its Pottery Barn Teen mattress pads, imported from China, were American-made. That was the third FTC penalty imposed this year among a host of ongoing investigations. Other FTC targets include the US subsidiary of Japan-based tractor maker Kubota, which in January was ordered to pay $2 million for falsely labeling thousands of its tractor replacement parts and other agricultural equipment as made in the USA. Some violators are able to escape imposition of penalties and receive what is referred to as a “closing letter” if they acknowledge the violation and take acceptable remedial action.
The increased focus on enforcement action against false or misleading claims of US manufacture coincides with a broader Biden administration effort to expand US-based manufacturing. The aim is to ensure that claims of made in the USA reflect reality and are not misleadingly illusory. To be marketed as entirely made in the USA, a product must have negligible or no foreign parts, and its final assembly must occur in the US. Businesses can also lawfully promote products as American-made with a caveat that distinguishes how much of the product was made in the US and how much of it was made abroad.
Businesses have a commercial motivation to advertise their product as American-made. Many US consumers are looking to support American companies with their purchasing dollars, and some are willing to pay a premium to do so. As a consequence, misleading USA-made claims invite class action lawsuits alleging that consumers did not receive what was advertised and seeking damages for alleged overpayment. For example, in March 2024, a class action lawsuit was filed alleging that Reynolds Consumer Products LLC falsely labeled its aluminum foil as “Foil Made in USA” because a substantial amount of bauxite is processed into the company’s aluminum outside the United States. The case is Washington v. Reynolds Consumer Products LLC, C.A. No. 24-02327 (SDNY) The complaint relies upon the FTC’s 2021 Made in USA Labeling Rule. Some similar class action claims alleging false or misleading made-in-the-USA labeling or advertising have been settled by other consumer product manufacturers.
Companies wishing to market their products as made in the USA are advised to carefully review the FTC Made in USA Labeling Rule and understand their manufacturing process and their supply chain to verify compliance. They are also advised to consult with counsel regarding needed substantiation that can be produced if any claim of made in the USA is questioned by regulators or if the company is targeted by consumer class action lawsuits for any claims of made in the USA in their product labeling and advertising.
[View source.]
