Retailers Beware: “You can’t say your products are made in the USA when [they are] made elsewhere.”
Gennex Media LLC, a customizable product online marketplace, and its sole officer and shareholder Akil Kurji, have agreed to an FTC consent decree resolving allegations the company falsely claimed its Brandnex novelty products were “Made in USA,” “USA MADE,” and “Manufactured Right Here in America!” when, in many instances, they were wholly imported from China. Gennex heavily promoted its products’ domestic origin on social media, declaring they “support USA jobs.” In a unanimous decision, Gennex and its principal were ordered to pay $146,249.24 and were required to cease making claims that its customizable promotional products, including wristbands, lanyards, temporary tattoos, and buttons, are made in America.
This action is another example of the FTC’s increased enforcement focus on “Made in USA” claims and comes after our previously-reported historic $1.2 million settlement in a 2020 “Made in USA” FTC enforcement action. The Commission’s Gennex Order provides specific guidance to retailers making unqualified and qualified “Made in USA” claims and “assembled in USA” claims:
Unqualified statements that products are Made in USA are only permitted where final assembly or processing or all significant processing occurs in the USA or virtually all ingredients or components of the products are made and sourced in the USA.
Qualified Made in USA statements are appropriate if the qualification is clear and conspicuous and “immediately adjacent” to the Made in USA claim and “accurately conveys the extent to which the product contains foreign parts, ingredients, components, and/or processing.”
Assembled in the USA claims are permitted where the product is “last substantially transformed” and principal assembly takes place in the USA and assembly operations in the USA are “substantial.”
The FTC issued a notice of proposed “Made in USA” rulemaking in June 2020. The Commission’s recent settlements signal that false or misleading “Made in USA” claims are an enforcement priority. This enforcement priority, coupled with the imminent rulemaking, counsels that retailers should remain vigilant when making “Made in USA” claims. Further information on FTC “Made in USA” guidance can be found here.