The use of country of origin claims in advertising, and in particular “Made in USA” claims, has been around for a long time — many companies want to showcase products that have been made in the United States by marking them with the phrase or using the Stars and Stripes in advertising. Before making claims like “Made in America” or “Built in the USA,” though, sellers must understand the strict federal and state laws and standards for making such claims. In September 2019, the Federal Trade Commission held a public workshop “to consider ‘Made in USA’ and other types of U.S.-origin claims and in particular sought comments from the public on whether it should update its “Made in USA” Enforcement Policy. While the Commission has not yet updated its Policy, it recently took action on two “Made in USA” cases, FTC v. Williams‑Sonoma and J-B Weld Company; moreover, J-B Weld is entangled in an ongoing class action in California, which has its own “Made in USA” standard. These cases show that the “Made in USA” regulation continues to be something sellers should pay close attention to when it comes to compliance.
“Made in USA” Background
Under Section 45a of the FTC Act, a product that is advertised or offered for sale with a “Made in USA,” “Made in America,” or an equivalent label must have domestic origins that are consistent with orders and decisions of the FTC. See 15 U.S.C. § 45a. The FTC’s Enforcement Policy provides that, to substantiate an unqualified “Made in USA” claim, a product must be wholly domestic or all or virtually all made in the United States. Specifically, “[a] product that is all or virtually all made in the United States will ordinarily be one in which all significant parts and processing that go into the product are of U.S. origin.”
Departing slightly from the “all or virtually all” standard, California law provides that companies cannot advertise Made in USA “if the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States.” Cal. Bus. & Prof. Code § 17533.7. The statute also provides a 5% safe-harbor provision, providing that “[t]his section shall not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States, if all of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 5 percent of the final wholesale value of the manufactured product.”