FTC Issues Highest Monetary Judgment Ever in a Made in USA Labeling Case

By Elizabeth Brotherton-Bunch
Penalties for false Made in USA labeling have historically been weak. In some cases, companies that deceptively labeled imported products didn’t even have to admit fault. But the FTC issued financial penalties in two recent cases, and appears to be moving toward stronger enforcement. Getty Images

Chemence, Inc., and its president will have to pay the agency $1.2 million for deceptively labeling several brands of glue.

Just before much of official Washington closed-up shop for the holiday break, the Federal Trade Commission (FTC) issued a decision that could signal that the agency plans to continue to get tough on those who deceptively label their imported products as Made in USA.

The FTC announced on Dec. 22 that it had settled a case with glue manufacturer Chemence, Inc., and its president James Cooke, finding that the company had “supplied pre-labeled and pre-packaged glues with deceptive ‘Made in USA’ claims” for a variety of retail glue brands. As part of the settlement, Chemence and Cooke must pay $1.2 million to the FTC, the highest-ever monetary judgment in a Made in USA case.

The FTC’s decision is another step forward in the fight for stronger Made in USA labeling enforcement. For years, companies that were found to have improperly labeled their imported products as Made in USA faced little-to-no consequences for their actions. In some cases, they didn’t even have to admit any fault.

But things appear to be shifting at the FTC, the government agency charged with overseeing Made in USA enforcement. In March 2020, the commission announced a $1 million settlement with Williams Sonoma over repeated labeling violations, the first time the FTC had issued a financial penalty in a Made in USA labeling case. In July 2020, the FTC proposed codifying the Made in USA standard into a rule that will allow the agency to seek civil penalties, damages and other sanctions for violations of Made in USA.

And the Chemence case is another sign that the FTC (rightly) plans to continue to take substantive action when companies are found to have knowingly mislabeled imported goods as Made in USA. In a statement, FTC commissioner Rohit Chopra said the agency is “turning the page on our permissive policy of the past.”

“Our new approach is a critical step forward for protecting the Made in USA brand, and it is a model for other FTC enforcement areas,” Chopra added. “There is more work to do, including finalizing a Made in USA fraud rule, but we are clearly moving in the right direction.”

Chemence is a repeat offender when it comes to Made in USA deception. The FTC settled a suit against the company in 2016 for making deceptive advertising claims for products sold under a number of glue brands, including Kwik Fix, Hammer Tite, and Krylex.

An example of glue falsely labeled as Made in USA by Chemence, Inc. Photo courtesy FTC

In the most recent case, the FTC alleged that Chemence and Cooke “supplied glues in packages labeled with deceptive unqualified ‘Made in USA’ claims, some with an image of the American flag.”

According to the FTC, the company provided its trade consumers with promotional materials that indicated that Chemence’s private-label and other products “were all or virtually all made in the United States,” despite the fact that “in numerous instances foreign materials accounted for more than 80 percent of the materials costs and more than 50 percent of the overall manufacturing costs for these products.”

Products that featured the misleading Made in USA claims included Master Super Blue, JB WELD SuperWeld, Stick Fast Instant CA Adhesive, Pink Gel Nail Glue, SAATI Ultrafix CA – MV, and Kiss Maximum Speed Nail Glue.  

Chopra noted that the $1.2 million settlement with Chemence “represents a sea change from the era of no-money settlements” and “reminds businesses that FTC orders are not suggestions.”

While there’s certainly more work to be done when it comes to Made in USA enforcement – AAM President Scott Paul outlined a handful of ideas in a recent blog post, for example – the FTC’s action in the Chemence case is a very solid step in the right direction.

Made in USA means something. American manufacturers work hard, and often face unique challenges, to make their products in the United States. They do it for a number of reasons, from being able to produce a higher quality product to creating jobs and economic growth in their communities.

Consumers know this, which is why many of them prefer to buy American-made products whenever possible. A lot goes into “Made in USA,” and having that label on a product can help it stand out.

When companies like Chemence or Williams Sonoma use deceptive advertising, they are aiming to take advantage of the public relations boost that comes with a Made in USA label without doing any of the hard work. That’s unfair to manufacturers, and it is unfair to consumers, too.

But now the FTC is beginning to take real action to discourage this cheating. We hope the agency will continue to investigate when companies engage in deceptive Made in USA labeling, and importantly, be willing to take substantive action to enforce the rules when cheating is uncovered.