As we reported a few months ago, the FTC has increased its enforcement of its “Made in USA” requirements – typically through warning letters rather than formal administrative or legal proceedings. This week’s proposed Consent Order against Bollman Hat Company and SaveAnAmericanJob, LLC demonstrates that if companies will not informally agree to corrective action to qualify or discontinue “Made in USA” claims that don’t meet the standard, the FTC will not blink but will go forward to bring a formal enforcement action.
Despite touting its brand as “Made in the USA since 1868” and “Made in in the USA for 100 Years or More,” the FTC alleged that over 70% of Bollman’s hat styles were wholly imported as finished hat products, and many of the remaining styles also contained significant imported content.
Bollman also created an “American Made Matters – Choose American” (AMM) seal to apply to its products, and then began licensing the seal to other companies through its wholly owned subsidiary SaveAnAmericanJob, LLC.
The qualifications to “earn” the seal fell far below the “all or virtually all” standard needed to make a “Made in USA” claim. AMM members were required to self-certify that at least 50% of the cost of at least one of their products was incurred in the U.S., and further that final assembly or transformation took place in the U.S. After self-certifying and paying the $99 annual licensing fee, Bollman and SaveAnAmericanJob would feature those third-party products and brands on its AMM website. The FTC alleged numerous problems with this seal.
First, the very notion of a seal itself – according to the FTC – implies that a product bearing that seal has been endorsed or certified by an independent third party. Because the seal was created by Bollman and SaveAnAmericanJob, the FTC found that Bollman misrepresented the independence of the AMM seal. Second, the application of the seal to third-party products allegedly deceptively implied that those products had been independently and objectively vetted for compliance with the seal standard, when in fact seal licenses were obtained through self-certification. Third, the display of third-party products and brands on the AMM website deceptively implied that such products were “all or virtually all” made in the USA. Fourth and finally, Bollman and SaveAnAmericanJob provided the “means and instrumentalities” to permit third-parties to make deceptive “Made in USA” claims via the AMM seal.
To settle the complaint, Bollman and SaveAnAmericanJob agreed to cease making unqualified U.S.-origin claims for products that do not meet the “all or virtually all” standard. Any qualified claims must clearly and conspicuously disclose the level of foreign components and/or processing. The parties also agreed to disclose their material connection to the seal, or any other certification, used to market their products. They are also prohibited from applying the seal to other products unless an independent third-party objectively evaluates the product for compliance with the standard, or they disclose that the seal is “earned” through self-certification.
The FTC has been focused on the use of seals and certificates in many contexts in the past year, including green marketing (with eco assurance, green promise, and green safety shield), doctor trusted seals, certified ethical site seals, and even a Trampoline Safety of America Award. This is a good time for marketers to take a fresh look at the seals and certificates and awards they promote in advertising and evaluate whether these awards are independent and verified and if consumers will understand the basis for the award.