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FTC Increases Scrutiny of “Made in the USA” Claims

Companies and advertisers need to ensure that any “Made in USA” claims they make are not misleading, as the FTC  has increased scrutiny of such claims.

The FTC has recently settled two actions against companies who it claimed were making misleading and unqualified claims that their products are “made in the USA”.

First, in February 2017, iSpring Water Systems, LLC (“iSpring”), a Georgia-based distributor of water filtration systems, agreed to stop making misleading claims that its products are made in the United States.  The FTC had alleged that iSpring deceived consumers with false, misleading, or unsupported claims that its water filtration systems and parts are “Built in USA,” “Built in USA Legendary brand of water filter,” and “Proudly Built in the USA,” when in fact iSpring’s products are either wholly imported or are made using a significant amount of inputs from overseas.  

Second, in March 2017, Block Division, Inc. (“Block”), a Texas-based distributor of pulley block systems, agreed to stop making misleading claims that its pulley blocks and other products are “Made in the USA”.  The FTC had alleged that for several years Block’s pulleys featured imported steel plates that entered the United States from overseas already stamped “Made in USA.” The FTC had also alleged that Block used unqualified “Made in USA” advertising claims on its website, in stores, through trade shows and authorized dealers, on social media, and through flyers and pamphlets, falsely representing that the pulley blocks, other products, and the parts used to make them, were all or virtually all made in the United States, when in fact they included significant imported parts that are essential to the function of the products.

The stipulated final orders in both matters prohibit these companies from making unqualified “Made in USA” claims for any product unless they can show that 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 United States. Both companies are also prohibited from making any country-of-origin representation about their products unless they possess and rely upon a reasonable basis for such representations.  Both companies are permitted to make qualified “Made in USA” claims as long as they include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, and/or processing.

The FTC has said that “consumers have the right to know that they can trust companies when it comes to ‘Made in USA’ claims” and has vowed to remain vigilant against misleading “Made in USA” claims as this is an important issue for Americans.  Perhaps in recognition of the importance of such challenges, such claims are handled out of the Enforcement Division, which typcially deals with breach proceedings.

Take Away:  Companies and advertisers need to be certain that their “Made in USA” claims, and claims similar thereto, are completely accurate and that any potential discrepancies in such claims are clearly and conspicuously disclosed.   Both the FTC and plaintiff’s attorneys have been challenging unsupported claims.

 

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