Tractor maker Kubota North America Corporation will pay a $2 million civil penalty for falsely labeling its replacement parts as “Made in USA,” the largest civil penalty ever in a Federal Trade Commission (FTC) Made in USA case.

In its complaint, released last week, the FTC alleges that since at least 2021, Kubota has labeled thousands of replacement parts as Made in USA when, in fact, they were wholly imported. After shifting production of some of its products overseas, the company failed to update its package designs that included the Made in USA labels, resulting in the sale of millions of replacement parts with the false label.  Making matters worse, at least in the FTC’s eyes, Kubota was previously sued by the FTC in 1999 for falsely claiming that a line of lawn tractors it manufactured was Made in USA and was subject to an FTC order in that case that expired in 2019. Continue Reading FTC Issues Record-Breaking Civil Penalty in “Made in USA” Case

The Federal Trade Commission (FTC) continues to focus its attention on “Made in the USA” claims, and this time the agency has fixed its gaze on a Florida-based company and its principal, whose claims regarding patriotic and Second Amendment-themed gifts were out of bounds.

In a recent complaint, the FTC alleged that the business, ExotoUSA LLC d/b/a/ Old Southern Brass, specifically targeted servicemembers and veterans by falsely stating that Old Southern Brass was a veteran-operated business that donated 10% of all sales to military charities. The FTC also charged that Old Southern Brass falsely represented, through express and implied claims, that all of its products were made in the United States. Statements such as “All of our products are made right here in the United States of America” directly contradicted evidence that many of the company’s products were either wholly imported from China or contained a significant amount of imported content.Continue Reading Made in or Made up? The FTC Closely Reviews “Made in USA” Claims

Last week the Federal Trade Commission (FTC) announced it had issued a complaint and proposed consent order against Instant Brands LLC for allegedly marketing products as “Made in the USA,” when they were actually made in China. Instant Brands, which manufactures Pyrex-brand products that include a range of mostly glass baking and cooking accessories, has already agreed to the settlement, which requires a payment of a monetary judgment of $129,416.

The company also agreed to three marketing restrictions:

  1. The FTC restricts the company from making unqualified U.S.-origin claims unless the product’s final assembly or processing, and all significant processing, takes place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the U.S.
  2. The agency requires that qualified “Made in USA” claims be accompanied by a disclosure regarding the presence of foreign parts, ingredients or components, and processing
  3. For any U.S.-assembly claims, it must be the case that the product is last substantially transformed in the U.S., principal assembly takes place in the U.S., and U.S. assembly operations are substantial

Continue Reading FTC Brings the Heat on Pyrex Manufacturer’s “Made in USA” Claims for Products Made in China

Recent trends indicate that consumers and the U.S. government are paying more attention to where products are sourced from.  

The Biden administration, for example, has made efforts to raise federal procurement standards for products “Made in America.” Specifically, the administration in March announced a final rule that outlined gradual increases to the “Made in America” requirement. As of October 25, the rule requires that federally procured products under the Buy American Act must have 60% of the value of their component parts manufactured in the United States. Under the prior rules, the Buy American Act only required that products contain 55% component parts manufactured in America in order to qualify for federal procurement. The threshold will further increase to 65% in 2024 and 75% in 2029.Continue Reading An Update to “Made in USA” for Federally Procured Products and FTC’s “Made in USA”

On August 30, the Federal Trade Commission announced a complaint and proposed order for Ohio-based Electrowarmth Products, LLC and its owner, alleging they improperly claimed that their heated fabric truck bunk mattress pads were made in the United States, when in fact, the textile products have been wholly imported from China since 2019.

The complaint alleges violations under the Textile Fiber Products Identification Act, the Textile Rules, and the FTC Act. The FTC alleges that after Electrowarmth moved production to China and stopped using U.S.-produced textiles as part an effort to cut costs in 2019, it continued to use claims such as “Made in USA,” “Made in the USA since 1939,” and “made-in-America products” in marketing for heated mattress pads.

According to the agency, Electrowarmth further misled consumers when it asked the Chinese manufacturer to produce and package the products in “exactly the same” way as they had previously been manufactured in the U.S.Continue Reading FTC Debunks Claim That Trunk Bunk Pads Were Made in the USA

With a new leader at the Federal Trade Commission comes new rules of practice. Chair Lina Kahn convened a first-of-its-kind open Commission meeting, allowing for live public comments following the meeting. In addition to issuing the Made in the USA Final Rule at the meeting, the FTC revised the procedures for issuing Magnuson-Moss Rules. This carries out Commissioner Chopra and now-Chair Khan’s call for more rulemaking, and the next step to former Chair Slaughter’s creation of a rulemaking group within the Commission. The changes concentrate the rulemaking process in the Chair’s office and strip away many of the procedures that helped lead to rules based on bipartisan consensus among the commissioners and support from FTC staff.

By way of background, to pass a rule under the Magnuson-Moss Warranty Federal Trade Commission Improvements Act (“Mag-Moss”), the FTC must: (1)  make a finding that the conduct at issue is “prevalent” and (2) conduct informal hearings allowing interested parties to cross-examine those making oral presentations. The FTC appears interested in applying Mag-Moss rulemaking in both the competition and consumer protection contexts.  Though Mag-Moss has statutory requirements that the FTC must follow, such as publishing a notice of proposed rulemaking, allowing public comment from interested persons, providing the opportunity for informal hearings, and promulgating rules based on the final record, the FTC has enacted procedural rules to carry out these statutory requirements.Continue Reading New Changes at the FTC: Return of the Rulemaking

Last week the FTC announced it had settled with Chemence, Inc. (“Chemence”) and the company’s president over deceptive “Made in USA” claims. The company was required to pay $1.2 million to the FTC, which amounts to the highest monetary judgment ever for a Made in USA case.

By way of background, unqualified Made in USA claims require that all or virtually all of the product is made in the United States. Previous FTC guidance stemmed from a 1997 Enforcement Policy Statement, but last year the FTC announced a Notice of Proposed Rulemaking for the Made in USA Labeling Rule, which would codify much of the Enforcement Policy. Notably, the proposed Rule would allow the FTC to seek civil penalties for each violation. The Rule has not yet been made final, but the opportunity to comment ended in September 2020.Continue Reading Superglue Manufacturer Stuck with $1.2 Million Judgment for Made in USA Violations

Proud that your products are “Made in the USA”? Before you wave the flag, know that an unqualified Made in USA claim means that your product must be “all or virtually all” made in the United States, and the Federal Trade Commission has bolstered its enforcement authority over deceptive Made in USA claims with a new proposal to allow civil penalties for violations of its Made in the USA standards.

We previously blogged about recent Made in USA actions and the FTC’s September 2019 Made in USA workshop to evaluate updates to the FTC’s long-standing Made in USA Enforcement Policy. The 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 — meaning that “all significant parts and processing that go into the product are of U.S. origin.” Qualified claims — for example, “Made in USA from imported leather” — may be acceptable if they include clear and conspicuous disclosure of the extent to which the product contains foreign parts, ingredients, components, and/or processing.Continue Reading Proposed FTC Rule to Allow Civil Penalties for Deceptive “Made in USA” Claims

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.[1] 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.”Continue Reading “USA, USA, USA…” – Recent Updates on “Made in USA” Claims

Being able to advertise your product as “Made in the USA” can be a key advantage to marketers and is an attribute that is important to many consumers. Aware of this, the FTC has been on the watch for deceptive Made in the USA claims. Last week, the FTC held a workshop on “Made in the USA” claims to consider consumer perception of these claims and the need for any changes to the existing guidance provided by the FTC.

Current FTC guidance on these claims stems from a 1997 FTC Enforcement Policy Statement in which the FTC concluded consumers are likely to understand an unqualified U.S. origin claim to mean that the advertised product is made in the USA with “all or virtually all” of the components made in the United States.Continue Reading FTC Workshop on “Made in USA” Claims