The Federal Trade Commission continues to aggressively enforce its “Made in USA” standards. In August, the FTC closed three investigations into advertisers' U.S.-origin claims and the closing letters provides some useful tips for all advertisers who are considering making their own “Made in USA claims.
According to the FTC's Enforcement Policy Statement on U.S. Origin Claims, in order to make a claim that a product was made in the United States, the advertiser must be able to substantiate that the product was “all or virtually all” made here. Some of the factors that the FTC considers when making this determination include the proportion of total manufacturing costs attributable to U.S. parts and processing, how far removed any foreign content is from the finished product, and the importance of the foreign content or processing in the product's overall function. The “all or virtually all” standard has also been codified in the FTC's Made in USA Labeling Rule.
Here's a quick recap of the three cases closed by the FTC – and a key takeaway from each.
General Pencil Company
The FTC expressed concerns that General Pencil Company made broad references to the company's history of making pencils in the United States without clarifying that the company now also offers some imported products and that some products include significant imported material. The FTC explained that, “unless marketers either specify which products are covered or directly link claims to particular products, consumers generally interpret U.S.-origin claims in marketing materials to cover all products advertised in those materials.”
The key takeaway here is – don't make broad U.S.-origin claims unless they apply to everything you make. And, if you can only substantiate a “Made in USA” claim for specific products, you need to be sure that your claim clearly specifies which products you are talking about.
Drywall Master Tools
The FTC also expressed concerns that Drywall Master Tools made broad, qualified “Made in USA” claims even though some products incorporate significant important components. The FTC also questioned whether the company's catalog included outdated photos of product packaging with “Made in USA” labels, even though those products were no longer made here.
In its closing letter, the FTC explained that it is deceptive to make a U.S.-origin claim “unless, at the time the claim is made, the marketer possesses and relies upon a reasonable basis substantiating the claim.” The FTC also explained that marketers must remain vigilant and update marketing materials if they can no longer substantiate the claims that are being made in them.
The key takeaway here is – you must ensure that your claims are truthful for the entire time you make them. That means periodically revisiting your claims to check to make sure that you can still substantiate them. And, don't overlook things like product packaging or product images, which may include outdated claims.
TLB Industries
Finally, in its closing letter to TLB Industries, the maker of dog training products, the FTC expressed concerns that the company may have made broad, qualified “Made in USA” claims when some products incorporate significant imported components.
Here, the FTC highlighted that, when advertisers include “Made in USA” claims in social media posts, they should ensure that those posts only relate to products that are actually made here. The FTC also warned advertisers that even hashtags – such as #madeinusa – may communicate U.S.-origin claims as well.
The key takeaway here is – don't forget about your social media posts. What you say in social – including in hashtags – is subject to the same rules as the rest of your advertising.
