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

To kick off this year’s National Advertising Division Annual Conference, Andrew Smith—the FTC’s new Director of the Consumer Protection Bureau—discussed his views on the Commission’s priorities with respect to remedies, privacy and data security, and national advertising cases. Given the backgrounds of the new Commissioners, Director Smith acknowledged that some of them may be

The ink was barely dry on our Monday blog when a new skirmish broke out (both on Twitter and in official records) in the FTC’s long-brewing remedy wars. This time the battle took place in another unlikely location – three Made in USA settlements.

First to set the scene. The FTC generals announced that they had accepted surrenders from three combatants who were attempting to sell products allegedly mislabeled as Made in USA. In one instance there were hockey pucks, “Patriot Pucks” that were patriotic if you happened to be a citizen of China and that were marketed as “The Only American-Made Hockey Puck.” In another instance, mattresses that were wholly imported from China were labeled as “designed and assembled in the USA.” And finally, backpacks and wallets were sold on websites that claimed to feature “American-Made Products” and the wallets were specifically promoted as “American Made.”


Continue Reading FTC Remedy Wars – Part Deux

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.


Continue Reading FTC Orders – Doesn’t Warn – Bollman Hat Company to Cease Deceptive “Made in USA” Claims, Licensing “American Made Matters” Seal to Others without Proper Vetting

Seal of the Federal Trade CommissionA change in administration inevitably raises questions regarding the priorities and direction of federal agencies. To help set the record straight, Lesley Fair, a Senior Attorney with the Federal Trade Commission’s (FTC or Commission), Bureau of Consumer Protection, reminded us during last week’s NAD Annual Conference that the FTC has kept quite busy over the last year or so, with numerous enforcement cases arising out of the FTC’s Bureau of Consumer Protection. Ms. Fair also shared her views regarding the FTC’s key enforcement priorities that affect advertisers and marketers. Perhaps unsurprisingly, these priority areas generally relate to (i) advertising substantiation; (ii) use of social media, endorsements, and consumer reviews; (iii) matters involving privacy and data security; and (iv) allegations of financial deception. While such topics warrant serious consideration and attention for advertisers, one would be remiss in failing to mention that, in typical Ms. Fair fashion, she discussed these issues in a manner that not only kept the audience engaged, but largely entertained.

With respect to advertising substantiation, Ms. Fair took the opportunity to remind the audience that despite our obsession with smartphones—and our assumption that they can do almost anything except fold our laundry—the FTC will carefully scrutinize advertisers’ claims about their products, including health apps for smartphones, to ensure they are adequately substantiated. As an example, Ms. Fair mentioned the Commission’s January 2017 Settlement with Breathometer, Inc. and Charles Michael Yim in which the FTC alleged that marketers of two app-supported smartphone accessories, marketed to accurately measure consumers’ blood alcohol content (BAC), failed to adequately test the accuracy of the app and failed to notify customers that the app regularly understated BAC levels. In another smartphone settlement from December 2016, FTC v. Aura Labs, Inc. and Ryan Archdeacon, the FTC alleged that the marketer’s blood pressure app lacked reliable testing, and that the app’s readings were significantly less accurate than those taken with a traditional blood pressure cuff. In both of these cases, Ms. Fair suggested that FTC seemed particularly concerned due to potential safety issues arising from the lack of proper testing, especially where an intoxicated driver might get behind a wheel, or where a consumer may think his/her blood pressure does not present a health risk. These cases serve as a reminder that the FTC will evaluate substantiation with an especially critical eye where advertisers make health and safety-related claims.


Continue Reading What’s the Federal Trade Commission Been Up to Recently?

Made in USABy now, anyone who is even a casual reader of our blog should know about the Federal Trade Commission’s (FTC) “Made in USA” requirements. As we have explained elsewhere, the FTC requires that a company’s products be “all or virtually all” manufactured in the United States (as well as “finally processed” domestically) for the