Tipping its hat to the Enforcement Policy Statement on U.S. Origin Claims, the Federal Trade Commission (FTC) filed suit against Bollman Hat Co. and a subsidiary for deceiving consumers with “Made in USA” claims for its hats and third-party products.
Despite the fact that more than 70 percent of the defendant’s hats are wholly imported as finished products, and the remaining 30 percent contain significant imported content, the defendant made “Choose American” and “Made in the USA since 1868,” claims on its product tags and social media posts.
Beginning in 2010, the Pennsylvania-based company also placed a U.S. origin seal reading “American Made Matters” on its products and licensed the seal to third parties. For an annual fee of $99, any company that claimed that 50 percent or more of the cost of at least one product was incurred in the United States, with final assembly or transformation in the country, could add the seal to its products.
The seal falsely represented by implication that the products bearing the seal were endorsed or certified by an independent third party, and that the companies had competent and reliable evidence that the products were all, or virtually all, made in the United States. In fact, none of the products and entities using the seal have been independently and objectively evaluated for compliance, the agency said.
In making false origin claims and providing the means and instrumentalities for third parties to commit deceptive acts, the defendants ran afoul of Section 5 of the Federal Trade Commission Act, the FTC alleged.
To settle the charges, the defendants agreed to stop making unqualified U.S. origin claims unless they can demonstrate that the products’ final assembly and all significant processing take place in the United States and that all, or virtually all, product ingredients and components are made and sourced in the U.S.
For qualified “Made in USA” claims, the defendants must provide a “clear and conspicuous” disclosure about the extent to which the product contains foreign parts, ingredients, and/or processing, pursuant to the proposed consent order.
Further, the defendants are prohibited from providing to others the means to make deceptive origin or certification claims about their products and must disclose any material connection they have with any certification used to promote their products. Claims that a product or service meets their certification standard are banned unless an entity with no material connection to them independently and objectively evaluates the product or service, or unless they disclose that certified products or services meet the standard through self-certification.
To read the complaint and consent order in In the Matter of Bollman Hat Company, click here.
Why it matters: The case is the third involving deceptive “Made in USA” claims brought by the FTC in the past 12 months. It is also the most recent action in which the agency has challenged what it called “selfie seals”: “allegedly deceptive certifications that aren’t supported by objective criteria.” Last year the FTC took action against defendants who prominently featured seals from allegedly independent review entities, such as “Trampoline Safety of America,” which touted the safety and performance of its trampoline products. In addition to substantiating U.S. origin claims, marketers should ensure that their seals or certifications are not misleading or deceptive to consumers.