FTC Seeks Comments on Its Proposed Made in USA Rule

Advertising Law

The Federal Trade Commission (FTC) has requested comments on its proposed Made in USA rule, which would codify its Enforcement Policy Statement on U.S. Origin Claims and allow the FTC to seek civil penalties for violations.

The proposed rule tracks the FTC’s previous decisions and orders by prohibiting marketers from including unqualified Made in USA claims on labels unless (1) final assembly or processing of the product occurs in the United States, (2) all significant processing that goes into the product occurs in the United States, or (3) all or virtually all ingredients or components of the product are made and sourced in the United States.

Marketers would be permitted to continue to make qualified claims, such as “Made in USA of U.S. and imported parts,” as long as they include clear and conspicuous disclosure of the extent to which the product contains foreign parts, ingredients, components and/or processing.

The proposed rule also covers labels making unqualified Made in USA claims appearing in mail order catalogs and mail order advertising. In addition, the proposed rule specifies that it does not supersede, alter or affect any other federal or state statute or regulation relating to country-of-origin labels, except to the extent that a state country-of-origin statute, regulation, order or interpretation is inconsistent with the proposed rule.

For 80 years, the FTC has taken enforcement actions that have established the principle that unqualified Made in USA claims imply no more than a de minimis amount of the product is of foreign origin. Since issuing its enforcement policy in 1997, which imposed the “all or virtually all” standard, the FTC has issued 24 administrative decisions and orders and entered into four federal court settlements enforcing the standard. The latest enforcement action was against Williams-Sonoma in March 2020. The company was required to pay $1 million to the FTC as part of the settlement.

The penalties for violation of the proposed rule can be substantial. The civil penalty amount, adjusted for inflation, is currently $42,530 per violation.

Comments are due by September 14, 2020. They can be submitted here.

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