- December 13, 2013
- Posted by: Seth Heyman
- Categories: Business Law, Marketing & Advertising Law
Apart from such notable exceptions as firearms, medical marijuana, and class action lawsuits, Americans are hard pressed these days to find any product touted as wholly “made in the USA.” This fact is frustrating to millions of consumers, many of whom respond favorably to those manufacturers who are able to make that claim. Although making the statement may results in increased sales, companies should first carefully examine what their products are comprised of before doing so.
This note of caution was illustrated in a recent FTC enforcement action, in which a marketer of iPhone accessories, bottle holders, lens cleaners, dog collars, and other seemingly unrelated products agreed to settle charges that it falsely claimed certain of its products were “Made in the U.S.A,” or “Truly Made in the USA” even though they contained substantial foreign content.
The company, E.K. Ekcessories, Inc., proudly proclaimed on its website that its “source of pride and satisfaction abounds from a true ‘Made in USA’ product.” In its complaint, the FTC asserted that, in fact, the company imported many of its products and components, and distributed deceptive promotional materials for its products to third-party retailers such as Amazon and REI. By making these allegedly false and unsupported statements, the FTC asserted that the company violated the Federal Trade Commission Act.
Under the proposed settlement, the company is prohibited from claiming that any product is made in the United States unless that product is all or virtually all made in the United States. The company also is prohibited from making any misleading claims about a product’s country of origin and from providing deceptive promotional material to third-party retailers, or otherwise providing the “means or instrumentalities” for others to make deceptive U.S.-origin claims. The company also is required to contact all distributors who bought or received products between January 1, 2010 and May 1, 2013, and provide them with a notice and a copy of the order.
According to the FTC’s 1997 U.S. Origin Claims Enforcement Policy Statement, for a product to be advertised or labeled as “Made in the U.S.A,” the product must be “all or virtually all” made in the United States; meaning that significant parts and processing must be of U.S. origin, and the product should contain no (or negligible) foreign content.