March 22, 2017

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FTC Takes on “Made in the USA” Claim for Second Time This Year

Made in the USA” is an attractive selling point for many consumers who want to support homegrown industry, so it is the topic of many advertising claims for a variety of products. But to establish that a product is American-made, manufacturers have to show all its key parts were made here. And if steel tags which proudly state “Made in the USA” were, in fact, manufactured overseas, that’s false advertising.

This is the situation faced by Texas-based Block Division, Inc., a manufacturer of metal pulleys. According to the FTC complaint released on March 8, 2017, Block’s advertising used images as well as explicit wording to reinforce its “Made in the USA” message. Yet, according to the FTC, the company imported integral components of its pulleys from other countries, including, ironically, the imported steel plates that were stamped with the words “Made in USA.”

Under a settlement with the FTC, Block Division is banned from advertising its products as USA-made unless the company can establish “the final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and all or virtually all ingredients or components of the product are made and sourced in the United States.” The company can make “qualified” U.S. origin claims only if it clearly and conspicuously “conveys the extent to which the product contains foreign parts, ingredients, and/or processing.”

Acting FTC Chairman Maureen Ohlhausen commented “Consumers have the right to know that they can trust companies to be truthful when it comes to ‘Made in USA’ claims. This is an important issue for American business and their customers, and the FTC will remain vigilant in this area.”

Two FTC documents, Complying with the Made in USA Standard and Enforcement Policy Statement on U.S. Origin Claims, outline fundamental requirements to comply with FTC enforcement guidelines and to substantiate “Made in the USA” claims:

  • All significant parts and processing that go into the product are of U.S. origin (the “virtually all” standard);

  • Competent and reliable evidence exists to back up the claim that the product in question is made in the U.S.

Block Division and the iSpring Water Systems settlement last month are the latest in a line of complaints the FTC has brought in recent years against companies that deceptively promote “Made the USA” advertising. These cases indicate the ongoing seriousness with which the Commission will treat such claims in future.

Comments on the proposed settlement will be accepted online until April 7, 2017.

© 2017 Keller and Heckman LLP

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About this Author

Sheila Millar, Keller Heckman, advertising lawyer, privacy attorney
Partner

Sheila A. Millar counsels corporate and association clients on advertising, privacy, product safety, and other public policy and regulatory compliance issues.

Ms. Millar advises clients on an array of advertising and marketing issues.  She represents clients in legislative, rulemaking and self-regulatory actions, advises on claims, and assists in developing and evaluating substantiation for claims. She also has extensive experience in privacy, data security and cybersecurity matters.  She helps clients develop website and app privacy policies,...

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