Senators Seeking Tougher Enforcement on USA Origin Claims

Advertising Law

A trio of senators told the Federal Trade Commission that “Made in the USA” enforcement actions were a disappointment and urged the agency to adopt tougher enforcement measures.

In September, the agency settled a pair of suits: one against a New York-based company advertising American-made hockey pucks and a second against related recreational and outdoor equipment companies from California.

The hockey company touted its pucks as “100% American Made!” when in fact it imported the products from China. As for the recreational companies, between 80 and 95 percent of their products were imported as finished goods or contained significant imported components despite claims that they were made in the United States, the FTC alleged.

While all the defendants agreed to stop making their false, misleading and unsupported country-of-origin claims about any product or service, neither of the settlement agreements included any form of monetary damages or civil penalties. Nor did the companies admit fault.

In response to the settlements, Senators Sherrod Brown (D-Ohio), Tammy Baldwin (D-Wisc.) and Christopher Murphy (D-Ct.) wrote to FTC Chairman Joseph Simons encouraging the agency to use its “full authority” in similar cases going forward.

“We do not believe ‘no-fault, no-money’ settlements adequately penalize companies that have taken advantage of American consumers, nor do they adequately deter other companies from committing future violations,” the lawmakers wrote. “If the consequences of misusing the ‘Made in the USA’ label do not include paying fines or admitting wrongdoing, it is unlikely that bad actors will be deterred from using the same deceptive tactics to sell their products in the future.”

The defendants in the recent settlements “brazenly” affixed “Made in the USA” labels to foreign-made products, the senators said, noting that consumers are often willing to pay a higher price for American-made goods.

“Lackluster enforcement creates an atmosphere in which consumers are misled and domestic producers are at a disadvantage,” senators Brown, Baldwin and Murphy wrote. “When a product says ‘Made in the USA,’ consumers should be able to trust that the product was made domestically.”

Therefore, the FTC should use its “full statutory authority” and require companies that abuse the “Made in the USA” label to pay fines and admit they lied to the public, the senators recommended. “Failure to take decisive actions risks weakening the significance of the ‘Made in the USA’ label and undermining American manufacturers.”

To read the letter, click here.

Why it matters: The letter echoed criticism from Commissioner Rohit Chopra, who dissented from the FTC vote to accept the proposed consent orders in September and issued a separate statement to declare the agency should seek “more tailored remedies” in cases of U.S. origin fraud, such as “restitution, disgorgement, notice and admissions of wrongdoing.” With high-profile commentary coming from the Senate and the commission, the next target of an FTC national origin action could be facing tougher enforcement.