FTC Continues to Keep its Eye on "Made in USA" Claims

In order for an advertiser to make an unqualified “Made in America” claim about a product, the Federal Trade Commission says that the advertiser must be able to substantiate that the product was “all or virtually all” made in the United States.  The “all or virtually all” standard comes from the FTC's Enforcement Policy Statement on U.S. Origin Claims, which was also recently codified in the FTC's Made in USA Labeling Rule. 

The FTC aggressively enforces this standard.  For example, in January, the FTC obtained its largest-ever “Made in USA” settlement from Kubota North America Corporation, resolving allegations that the company falsely labeled some of its replacement parts as being of U.S.-origin.  As makers of glassware, belts, pet products, electric bikes, promotional products, glue, and so many other products know, the FTC regularly investigates marketers who it believes don't have proper support for their “Made in USA” claims. 

The FTC recently announced that it closed two new investigations into advertisers' “Made in USA” claims.  Here are the details. 

Wilson Sporting Goods

The FTC investigated whether certain Wilson Sporting Goods marketing materials overstated the extent to which some of its products were made in the United States.  According to the FTC, “although Wilson temporarily shirted to dual sourcing certain youth footballs from the USA and Vietnam, the Company failed to update marketing materials to reflect this change.” 

In its letter to Wilson closing the investigation, the FTC reminded marketers that they “must remain vigilant and update marketing materials if they can no longer substantiate that products previously advertised as ‘Made in the USA’ remain ‘all or virtually all' made in the United States.”  In other words, it's important for advertisers to ensure – for the entire time that they make a claim – that the claim is accurate.  This means that advertisers need to have a process in place – such as regular, periodic reviews of substantiation – to identify manufacturing or other changes that could impact the truth of their claims.  

The FTC also emphasized that, when marketers do make changes to their claims, they need to ensure that those claim updates get distributed to others who are selling their products as well.  The FTC explained, “if updates become necessary, marketers should communicate changes to third party retailers and distributors and ensure materials are revised accordingly.” 

The FTC also cautioned Wilson about making broad claims that its products are made in the United States when only some products are, in fact, made here.  (Check out yesterday's blog post for more about this issue.)

Oak Hall Industries

With graduation season right around the corner, there was no better time for the FTC to look into claims by Oak Hall Industries.  Here, the FTC expressed the concern that Oak Hall's marketing materials may have overstated the extent to which certain of its products, including academic and judicial regalia, are made in the United States. 

In its letter closing the investigation, the FTC told Oak Hall that while it was appropriate for the company to promote its general commitment to American jobs and highlight U.S. processes, it should not “state or imply that products are wholly or partially made in the United States unless the Company can substantiate those claims.”  

The FTC raised two other interesting issues as well. 

First, the FTC highlighted the fact that the FTC's general “all or virtually all” standard is different (and less strict) than the standard used under the Textile Rules to determine whether a U.S.-origin claim is appropriate.  (The Textile Rule has certain country-of-origin labeling requirements.)  There, “marketers only need consider the origin of materials that are one step removed from the particular manufacturing process.”  

Second, the FTC also noted that, in connection with the FTC's investigation, Oak Hall is also reviewing its shipping policies and practices to confirm that the company is in compliance with the FTC's Mail Order Rule (which requires, essentially, that marketers (who are selling on the internet, as well as by phone or mail) have a reasonable basis for their shipping claims, and that marketers provide notice and an opportunity to cancel if they're not going to ship on time).