March and April were very busy months for the Federal Trade Commission’s Office of Consumer Protection staff who focus on “Made in USA” enforcement. Indeed, FTC issued seven “closing letters” to companies during a three-week period, in which FTC closed out its investigations involving allegations that each company “overstated the extent to which” the products in each case were made in the United States. In each case, the FTC closed out the investigation based on the company’s agreement to implement a remedial action plan, including but not limited to such actions as removing unqualified US-origin claims from websites and social media and providing corrected qualified claims to third-party resellers and distributors. This flurry of activity began on March 14, 2017 and ended on April 5, 2017, as follows:
- Ratio LLC – Coffeemakers (March 14, 2017): FTC asserted that although Ratio assembles coffeemakers in the United States using some domestic components, most of the parts, including those that make the coffeemakers functional, were imported.
- Wilson Electronics, LLC – Electronics (March 17, 2017): FTC stated that although Wilson Electronics does assemble some of its products in the United States, these products incorporate significant imported content, while some other of its products are wholly imported.
- Suntactics, Inc. – Solar Charger Products (March 22, 2017): FTC alleged that the company’s solar charger products incorporate imported solar cells and other key components.
- APEC Water Systems – Water Filtration Products (March 22, 2017): FTC noted that while APEC designs and assembles systems in the U.S., the systems incorporate significant imported parts.
- Versa Products, Inc. – Standing Desks (March 31, 2017): Although the adjustable desks include some US components, FTC found that key parts such as the electric motors used to raise and lower the desks, were imported.
- Cardinal Scale Manufacturing Company – Detecto Scales (April 5, 2017): FTC found that although many Cardinal scales were assembled in the US with a mix of US and imported parts, about 10 to 20% of the company’s products were wholly imported.
- Innovative Office Products, LLC – Standing Desks (April 5, 2017): Similar to the Cardinal case above, FTC found that although some Innovative products were designed and assembled in the United States, the company carries some products that are wholly imported.
While it is unclear from the closing letters themselves as to what prompted the FTC’s review of each of the companies’ advertising and promotion of its respective goods, the FTC has been very forthright about its stepped up monitoring of the marketplace as well as its reliance on business to business complaints. Each of the closing letters indicates that unqualified “Made in USA” claims must meet the Commission’s policy statement on US original claims, which requires that “all or virtually all” of the product was made in the United States. The Commission generally analyzes a number of different factors to determine whether a product is, in fact, “all or virtually all” made in the United States, including the proportion of the products total manufacturing costs attributable to US parts and processing, how far removed any foreign content is from the finished product, and the importance of the foreign content or processing to the overall function of the product.
As we have noted in prior Alerts, the FTC continues to take all “Made in USA” claims very seriously and accord them a high level of enforcement priority. We fully expect this enforcement trend to continue, particularly under the Trump Administration which has clearly and repeatedly identified US manufacturing and the use and sale of American-made products as a top priority.