The FTC is Considering Strengthening Enforcement of “Made in USA”

By Elizabeth Brotherton-Bunch
Sep 14 2020 |
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Companies long have gotten away with falsely labeling imported products as American-made.

Remember Patriot Puck? It was touted as the “only American Made Hockey Puck,” with marketing materials that included the American flag.

Then there’s PiperGear USA, a company that sold thousands military-themed, Made in USA labeled merchandise on military bases directly to U.S. service members. Or Nectar Sleep, which sold thousands of “Assembled in the USA” mattresses to consumers.

So what connects these three seemingly different companies? They all lied to consumers.

In March 2019, the Federal Trade Commission (FTC) unveiled that the three companies knowingly sold imported items that they falsely claimed were manufactured in the United States.

It was pretty egregious stuff, especially considering how heavily the companies wrapped themselves in the American flag to sell their products. But unfortunately, the companies didn’t suffer any real consequences. No fines were issued. They didn’t even have to admit they were at fault.

Sadly, this was no exception. The FTC’s enforcement of Made in USA labeling over the years has been notoriously weak, with companies suffering little-to-no consequences for misleading consumers.

But that may be changing. The FTC is considering new guidelines to strengthen its Made in USA enforcement mechanisms, including by allowing civil penalties to be issued against companies when they are first discovered to have falsely identified their imported products as Made in USA.

The agency also is weighing whether to set up avenues to allow for further legal action against companies that knowingly misrepresent their products, including through disgorgement (i.e., making the companies return the money it made on the products in question) or by allowing consumers to seek redress.

Perhaps most importantly, these new rules would apply to marketing materials in print and electronically – i.e., on the Internet, a place where false Made in USA labeling and promotion runs rampant. Previously, the FTC has narrowly focused on labels physically applied to products, which limited the agency’s ability to enforce Made in USA in e-commerce.

The FTC has been taken some previous steps to strengthen its enforcement of Made in USA. Earlier this year, it announced retailer Williams-Sonoma would pay a $1 million fine for falsely labeling several of its imported products (across several of its brands!) as Made in the USA. It was the first time the agency had issued any financial penalty for companies for falsely claiming their imported products were manufactured in the United States.

Williams Sonoma falsely promoted this bakeware as “made in the USA,” but the products were actually imported. | Photo courtesy FTC

But as historic as it was, that fine only came after years of investigation.

In 2018, Williams Sonoma first was found to have mislabeled mattress pads as “Crafted in America” when in reality, they were made in China. While Williams Sonoma corrected the country of origin identification on that specific product, it didn’t suffer any real consequences. The retailer continued to mislabel several of its other products, and the financial penalties weren’t issued until two years later.

That’s why it is so important that the FTC strengthen its enforcement mechanisms. Companies need to know there will be immediate and meaningful consequences for misleading consumers.

There’s support for stronger Made in USA enforcement on Capitol Hill. Sens. Tammy Baldwin (D-Wis.), Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.) and Chris Murphy (D-Conn.) wrote to the FTC last week encouraging the agency to “utilize all of its existing authority to establish and enforce Made in USA standards.”

“We ask that any final rule and its implementation cover all online Made in USA claims, as well as physical labels, and emphasize the Commission’s authority to apply civil penalties to violators,” the senators wrote. “Further, we want to emphasize the importance of strong enforcement of Made in USA labeling standards throughout the regulatory process to protect American manufacturers and consumers from fraud.”

There’s a reason why companies big and small mislabel their imported products as Made in USA – it’s a huge marketing tool. Opinion polls often show strong support for buying American-made goods. Promoting a product as Made in USA can give it an edge in a crowded marketplace; consumers may even be willing to pay a little more money to buy it.

But a whole lot of work goes into a Made in USA product. American companies must abide by labor and environmental standards that are more stringent than those in many other countries, including places like China. The offshoring of U.S. manufacturing has meant that it can be harder to make products here – American Giant, for example, had to create an entire supply chain before it could start manufacturing the Greatest Hoodie Ever Made.

When consumers look for a “Made in USA” product, whether in the aisles of a big box store or while shopping online, they are making a choice.

Maybe they want to ensure their money isn’t supporting sweatshop labor overseas.

Or perhaps they want to buy an American-made product to support local jobs, or they want to invest their money into their communities. That’s especially important right now, at a time when so many small businesses are struggling in the wake of the COVID-19 pandemic. Buying something American-made can really go a long way.

No matter the reason, consumers should be able to trust that a product that is marketed as Made in USA, whether in a store or on the Internet, is indeed Made in USA. American manufacturers should know that the FTC has their back, and is willing to enforce standards to ensure cheaters aren’t gaming the system.

We encourage the FTC to put stronger Made in USA enforcement mechanisms into place, and to be willing to go after companies when they purposely mislead consumers.