FTC Brings First Civil Penalty Action Under New “Made in USA” Rule
The FTC entered into a consent order with Lithionics Battery LLC and its General Manager, settling allegations the company misrepresented its lithium ion cells are made in the United States. This is the first case the FTC has brought under its new civil penalty authority provided in the Made in USA Labeling Rule, which we wrote about last summer.
According to the FTC, Lithionics expressly claimed – in videos posted to social media and on the company’s website and in catalogs – that their products were “Made in USA” and “Proudly Designed and Built in USA,” displayed alongside American flag imagery, to convey Made in USA marketing messages for their battery, battery module, and battery management system products. The FTC alleged that, in fact, the products were made in China.
The FTC’s order imposes a $105,319.56 civil penalty, which, as the FTC’s press release indicates, is equal to three times Lithionics’ profits attributable to the claimed illegal activity. In addition, the defendants are prohibited from making unqualified US-origin claims for their products unless all significant processing and the final assembly or processing takes place in the United States, and all or virtually all components are also made and sourced domestically. Nor may the defendants make qualified Made in USA claims unless they include clear disclosures about the extent to which the products contain foreign components or involved foreign processing. And if the defendants convey that a product is assembled in the US, they must ensure it was last substantially transformed here, principal assembly took place here, and that US assembly operations are substantial.
In all, it appears the FTC is poised to enforce its Made in USA Labeling Rule beyond mere “labeling” and with significant penalties attached.