FTC Takes Action on Country of Origin Claims

Advertising Law

Taking on “Made in USA” claims, the Federal Trade Commission (FTC) filed two new cases: one against a New York-based company advertising American-made hockey pucks and a second against related recreational and outdoor equipment companies from California.

In the case against the puck company, the FTC said Patriot Puck and corporate officer George Statler III promoted the products as “Made in America,” “100% American Made!” and “The Only American Made Hockey Puck!” on the company’s website and in other online ads, when in fact the company had imported more than 400,000 pucks from China since 2016, according to the complaint.

The second case involved Sandpiper of California and PiperGear, the makers of travel bags, wallets, backpacks, tactical gear and personal security items that purportedly were all or virtually all made in the United States. The claims appeared on product labels, social media, promotional materials, company websites and advertisements throughout the country, the FTC alleged, and the defendants attempted to appeal to the patriotism of consumers by using an American flag and the claim “U.S. Made By S.O.C.” (Sandpiper of California) in its logo.

But in reality, approximately 80 percent of PiperGear’s products were either imported as finished goods or contained significant imported components, while 95 percent of Sandpiper’s products were imported as finished goods, the agency said. In some instances, Sandpiper inserted wallet cards displaying false U.S. origin claims to perpetuate the false advertising.

To settle the cases, all the defendants agreed to stop making their false, misleading and unsupported country of origin claims about any product or service. The proposed settlement orders prohibit the defendants from making unqualified U.S. origin claims unless they can demonstrate that the final assembly or processing of the products (and all significant processing) takes place in the U.S. and that all or virtually all ingredients or product components are made and sourced in the United States.

Going forward, qualified “Made in USA” claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients and/or processing, pursuant to the agreements. In order to claim that a product is assembled in the United States, the defendant must ensure that it was last substantially transformed in the U.S., that its principal assembly takes place in the U.S. and that the U.S. assembly operations are substantial.

To read the complaint and the proposed consent order in the case against the hockey puck defendants, click here.

To read the complaint and consent order in the case against the California companies, click here.

Why it matters: The commission voted 4-1 to issue the complaints and accept the proposed consent orders, with commission members using the case to advocate for additional agency powers. Dissenting voter Commissioner Rohit Chopra issued a separate statement to declare that the FTC should modify its approach to resolving “serious” U.S. origin fraud “by seeking more tailored remedies that could include restitution, disgorgement, notice and admissions of wrongdoing, based on the facts and circumstances of each matter.” Commissioner Rebecca Kelly Slaughter, joined by Chair Joseph J. Simons, issued a statement to also suggest more enforcement power for the FTC. “For example, in the U.S. origin claim context, there may be cases in which consumers paid a clear premium for a product marketed as ‘Made in the U.S.A.’ or made their purchasing decision in part based on perceived quality, safety, health or environmental benefits tied to a U.S.-origin claim,” she wrote. “In such instances, additional remedies such as monetary relief or notice to consumers may be warranted.”



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