This month, the Federal Trade Commission (FTC) posted a letter dated February 5, 2019 regarding overstating of “Made,” “Built,” or “Manufactured” in the USA claims. The letter was addressed to the attorneys representing Whiteside Machine & Repair Co., Inc. and concerned the extent to which Whiteside products, including router bits, are made in the United States. Specifically, although Whiteside performs some manufacturing functions in the United States, the FTC said that many of its products contain significant imported components. The letter reiterated the FTC’s long-held position that ‘unqualified U.S.-origin claims in marketing materials – including claims that products are “Made,” “Built,” or “Manufactured” in the USA- likely suggest to consumers that all products advertised in those materials are “all or virtually all” made in the United States.’
The letter states:
As discussed, unqualified U.S.-origin claims in marketing materials – including claims that products are “Made,” “Built,” or “Manufactured” in the USA- likely suggest to consumers that all products advertised in those materials are “all or virtually all” made in the United States. The Commission may analyze a number of different factors to determine whether a product is “all or virtually all” made in the United States, including the proportion of the product’s 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 to the overall function of the product.
The Commission has noted that “[w]here a product is not all or virtually all made in the United States, any claim of U.S. origin should be adequately qualified to avoid consumer deception about the presence or amount of foreign content. In order to be effective, any qualifications or disclosures should be sufficiently clear, prominent, and understandable to prevent deception.”
In blatant cases, the FTC pursues enforcement action. However, although the FTC can bring enforcement actions, it frequently will try to work with companies to bring them into compliance through remedial actions. In deciding not to pursue the Whiteside matter further, the FTC pointed out that:
To avoid deceiving consumers, Whiteside implemented a remedial action plan to update and qualify its representations. For Whiteside’s own materials, the Company: (1) stickered over outdated claims on product packaging; (2) updated online marketing materials; and (3) printed new catalogues, signs, banners, and product packaging. Whiteside also sent a detailed communication to dealers requiring them to: (1) sticker over claims on products in their possession; (2) remove potentially deceptive point-of-sale materials; and (3) update dealer controlled online materials, including websites and social media accounts.
As discussed, it is appropriate for the Company to promote the fact that it is American owned, employs workers, or performs certain processes in the United States, provided that marketing materials do not overstate the extent to which Whiteside’s products are made in the United States. Additionally, FTC staff is available to work with companies to craft qualified claims that serve the dual purposes of conveying non-deceptive information to consumers and highlighting work done in the United States.
In a footnote, the FTC pointed out that additionally, beyond express “Made in USA” claims, ” [d]epending on the context, U.S. symbols or geographic references, such as U.S. flags, outlines of U.S. maps, or references to U.S. locations of headquarters or factories, may, by themselves or in conjunction with other phrases or images, convey a claim of U.S. origin.”
The FTC’s policy statement was published in Federal Trade Commission, Issuance of Enforcement Policy Statement on “Made in USA ” and Other US Origin Claims, 62 Fed. Reg. 63756, 63768 (Dec. 2, 1997), and appears on the FTC website here. A booklet entitled “Complying with the Made in USA Standard” may be downloaded from the FTC website.
Companies should ensure that their marking and advertising claims comply with the FTC standard. Our International Commercial and Trade group has extensive experience in assisting companies in this area. Feel free to contact Ted Murphy, Stuart Seidel or any member the practice with whom you normally work.