Use Caution: "Made In USA" Advertising May Be Closely Regulated
Introduction
The Federal Trade Commission (FTC) has taken action against Made in USA claims. Critically, the FTC takes a narrow view of what qualifies as domestic production, and FTC rules require some factual basis for Made in USA claims. You should be extremely careful when making "Made in the USA" claims in advertising or marketing materials, especially if your product doesn't meet the required standard under the law.
The FTC has taken action against Made in USA claims.
The FTC has taken action against false Made in USA claims.
The FTC has taken action against misleading Made in USA claims.
The FTC has taken action against deceptive Made in USA claims.
The FTC takes a narrow view of what qualifies as domestic production.
According to the FTC, "all or virtually all” of a product must be produced in the U.S. for it to count as domestic production.
In other words, all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or negligible — foreign content. And although there is no single “bright line” to establish when a product is or is not “all or virtually all” made in the United States, there are a number of factors that the FTC will look to in making this determination.
For starters, in order for a product to be considered “all or virtually all” made in the United States, the final assembly or processing of the product must take place in the United States. Beyond this initial assessment, the Commission will consider other factors, including but not limited to the portion of the product’s total manufacturing costs that are attributable to U.S. parts and processing; and how far removed from the finished product any foreign content is.
See https://www.ftc.gov/system/files/documents/plain-language/bus03-complying-made-usa-standard.pdf.
FTC rules require some factual basis for Made in USA claims.
The FTC requires you to have a reasonable basis for your claims. If you make a claim, the FTC expects that you will be able to back it up. For example, if your company advertises that its products are "Made in USA," but they are not actually made in America (or even partially made), then this could be considered deceptive advertising under federal law.
The FTC also does not care about the intent of the manufacturer; it cares about what happens at the end result of production and sale: Did this item start as an American product? Did it end up being sold as an American product? The answer may seem obvious -- but many companies get tripped up by this rule when trying to advertise their goods as Made In USA when they aren't really from America at all!
The FTC can request an injunction to stop false advertising.
In some cases, the FTC will ask for a court order to stop the false advertising and impose fines on companies that violate it.
The FTC can request an injunction to stop false advertising.
The FTC can fine companies for significant monetary amounts per violation.
Conclusion
You should be extremely careful when making "Made in the USA" claims in your advertising or marketing materials. The FTC has taken action against Made in USA claims, and will likely continue to do so. The FTC takes a narrow view of what qualifies as domestic production, and requires some factual basis for Made in USA claims. In addition, if you make an affirmative claim about where something is made or produced (which includes packaging), then you must have reasonable basis for that claim before making it publicly available--that means checking with suppliers, reviewing documentation from manufacturers or producers; anything else won't cut it!
If you have any questions regarding "Made in USA" advertising, please feel free to reach out to the attorneys at Michael P. Mazza, LLC (www.mazzallc.com).