Unraveling the Intricacies of "Made in USA" Claims

In an era where consumers are increasingly seeking products made domestically, understanding the complexities behind "Made in USA" claims is critical. Recent enforcement actions by the Federal Trade Commission underscore the importance of accuracy and transparency in these claims.

Read the full article.

About the authors
Jack B. Hicks
James K. Kearney
Angela Ennis
Andrew Tuggle

Transcript

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape. 

With a focus on innovation, collaboration and client service, we are committed to delivering exceptional value to our clients and to the communities we serve. And now our latest episode

In an era where consumers are increasingly seeking products made domestically, understanding the complexities behind "Made in USA" claims is critical. Recent enforcement actions by the Federal Trade Commission underscore the importance of accuracy and transparency in these claims. 

The FTC recently issued a "record civil penalty" against Williams-Sonoma, Inc. for misleading "Made in USA" claims. This landmark ruling emphasizes that inaccuracies in origin claims will not be overlooked. The consent order outlined by the FTC mandates that products labeled as Made in the USA must undergo substantial transformation in the United States, and all or virtually all components must be sourced domestically.

The FTC has also ordered annual reports on compliance with the following stated guidelines: Made in USA claims will not be allowed unless the retailer can show that the product’s final assembly or processing — and all significant processing — takes place in the U.S., and that all or virtually all ingredients or components of the product are made and sourced in the U.S.
Qualified Made in USA claims are permitted only as far as there is a “clear and conspicuous” disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing, and assembled in USA claims are only permitted where product assembly is quote “last substantially transformed” in the U.S.

Navigating Made in USA claims begins with understanding the FTC's guidelines as detailed in their 42-page document, "Complying with the MADE IN USA STANDARD." These guidelines clarify the criteria for making unqualified and qualified Made in USA claims, emphasizing the need for accurate and non-misleading product labeling.

Beyond the FTC, the Customs and Border Protection (CBP) Agency plays a crucial role in enforcing the country-of-origin marking requirements. State laws, such as California's Made in USA law, may impose stricter standards, and industries like apparel and automotive are subject to specific legislation that affects labeling practices.

To minimize legal risks associated with Made in USA claims, companies must implement robust compliance programs. This involves conducting internal audits, maintaining effective controls, and staying abreast of evolving product SKUs and supply chain sourcing. Active monitoring and adaptation to regulatory changes are key to ensuring ongoing compliance.

The Williams-Sonoma case serves as a cautionary tale, highlighting the consequences of non-compliance and the importance of accurate marketing claims. By examining the mistakes made and the penalties incurred, other companies can learn valuable lessons about the significance of adhering to Made in USA standards.

The "Made in USA" label carries significant weight, signaling quality and domestic craftsmanship to consumers. However, the path to ensuring compliance with Made in USA claims is fraught with complexities. By understanding the FTC's guidelines, considering additional regulatory factors, and implementing rigorous compliance practices, retailers can uphold the integrity of their marketing claims.

Retailers are encouraged to review their current labeling practices and consult with legal counsel or compliance experts to ensure they meet the stringent standards set forth by the FTC and other regulatory bodies. By proactively managing compliance efforts, businesses can avoid the pitfalls of misleading claims and foster trust with their customers.

In a marketplace where transparency and authenticity are highly valued, maintaining rigorous compliance with Made in USA claims is not just a legal requirement—it's a strategic advantage.

Thank you for listening to Womble Perspectives. If you want to learn more about the topics discussed in this episode, please visit the show notes where you can find links to related resources mentioned today. 

The show notes also have more information about our attorneys who provided today's insights, including ways to reach out to them. Don't forget to subscribe via your podcast player of choice so that you never miss an episode. Thank you again for listening.