NARB, FTC Consider National Origin Claims

Advertising Law

With national origin claims on the enforcement radar of both the National Advertising Review Board (NARB) and the Federal Trade Commission (FTC), the FTC announced a public workshop later this month to consider claims such as “Made in USA.”

Existing guidance—the agency’s “Enforcement Policy Statement on U.S. Origin Claims”—dates back to 1997, and the FTC asked for input on whether an update is needed. In advance of the September 26 workshop, the FTC solicited comment on questions such as “How do consumers interpret ‘Made in USA’ claims?” and “Does this interpretation vary depending on the product advertised (e.g., do consumers interpret a claim made with respect to a shovel in the same way they do a claim made with respect to a smartphone)?”

The agency also inquired about the rationales underlying consumer preferences for products made in the USA and what types of consumer perception testing have been done on national origin claims.

When consumers see product advertisements or labels stating or implying that products are “Made in USA” or the equivalent, the FTC wondered, what amount of U.S. parts and labor do they assume are in the products, and does the calculus vary by product?

Other questions focused on the costs and benefits of enforcing bright-line, cost-based standards or a flexible standard requiring a case-by-case analysis; whether companies that advertise their products as “Made in USA” charge higher prices for such claims; the impact of a “Made in USA” claim on purchasing decisions; and what remedies the FTC should seek against companies that make deceptive national origin claims, including whether the agency should promulgate a rule to add the potential for civil penalties in addition to equitable relief.

Comments will be accepted until October 11.

In other national origin news, the NARB recently referred an advertiser to the FTC after it declined to comply with the panel’s recommendations. Illinois Tool Works challenged “Made in USA” claims made by competitor J-B Weld that were posted on its product packaging and website for its epoxy and adhesive products.

The various components of J-B Weld’s products—including the tubes, caps and applicators—came from other countries, meaning the products were not “all or virtually all” made in the United States, as required by the FTC’s national origin guidance, Illinois Tool Works argued.

J-B Weld countered that the tubes, caps and applicators were simply part of the product packaging, so the claims did not apply to those pieces. The National Advertising Division (NAD) disagreed, recommending that the national origin claims be discontinued.

While the FTC guidance is silent with respect to the question of whether the component parts should be considered part of the packaging or the product itself, the NAD noted that regulators have understood that consumers “care a great deal” about “Made in USA” claims, concluding that the components should be considered part of the product itself.

The advertiser appealed to the NARB, but the panel upheld the NAD’s decision.

“[A] sufficient number of reasonable consumers would consider the caps, tubes, syringes and/or applicators to be part of the ‘product’ covered by the advertiser’s domestic-origin claims,” the NARB wrote. “Among other issues, the panel was persuaded by the prominence on the packaging for the epoxy products of the promotion of the ‘RE-SEALABLE/NO WASTE CAP.’”

J-B Weld declined to adopt the NARB’s recommendations, however, stating that its “Made in USA” advertising “is adequately substantiated in accordance with applicable laws and regulations.”

In light of the advertiser’s decision not to comply, the NARB referred the matter to the FTC for possible enforcement action.

To learn more about the FTC’s upcoming workshop, click here.

To read the NARB’s press release, click here.

Why it matters: “Made in USA” and other national origin claims have been the subject of recent enforcement actions by the FTC as well as the NARB. With a public workshop on the agenda—and facing the possibility that the FTC will promulgate a new rule with the potential for civil penalties—stakeholders should take advantage of the opportunity to weigh in with comments for the agency.



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved