Williams-Sonoma Reaches $1M Settlement With FTC

Advertising Law

Williams-Sonoma Inc., which does business as Williams Sonoma, Williams Sonoma Home, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Rejuvenation, Outward and Mark & Graham, has agreed to stop making false, misleading and unsubstantiated claims that certain of its product lines are all or virtually all made in the United States.

For most products (other than automobiles and textile and wool goods) there is no labeling requirement to indicate that a product is “Made in USA.” If a manufacturer or marketer elects to do so, it must comply with the FTC’s Made in USA standard, which requires that “all or virtually all” of the product has been made in the United States. Under this standard, a product must contain no or negligible foreign content and all significant parts, processing and labor that go into the product must be of U.S. origin.

The FTC was first made aware of Williams-Sonoma’s Made in USA claims in 2018, when the FTC launched an investigation into ads and promotional materials for Pottery Barn Teen organic mattress pads that were labeled as Made in USA despite these products actually being made in China. Williams-Sonoma responded that this misrepresentation was an “isolated instance of human error” and committed to a multistep verification process to prevent deceptive country-of-origin claims. As such, the FTC closed the investigation.

However, the FTC subsequently received a report identifying numerous Made in USA claims that allegedly deceived consumers into believing that certain product lines were all or virtually all made in the United States, when in fact these products were wholly imported or contained significant imported materials or components. This prompted the FTC to issue a complaint concerning the false or unsubstantiated representations. On March 30, 2020, the FTC issued a proposed consent order requiring Williams-Sonoma to pay $1 million to the FTC.

Williams-Sonoma is prohibited from making unqualified Made in USA claims for any product unless it can demonstrate compliance with the FTC’s Made in USA standard. Any qualified Made in USA claim must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, components and/or processing. To claim that a product is “Assembled in USA,” the product’s last substantial transformation must take place in the United States, its principal assembly must take place in the United States, and United States assembly operations must be substantial.

The order also prohibits Williams-Sonoma, its officers and any other company representatives from making untrue, misleading or unsubstantiated country-of-origin claims in their marketing materials about any product or service.

View the proposed consent order here.

Why it matters: The FTC’s actions are consistent with the guidance it provided in its Enforcement Policy Statement on U.S. Origin Claims and demonstrate the need for advertisers to ensure that Made in USA claims are true and substantiated and that all country-of-origin claims are verified. In regard to the settlement, Andrew Smith, the director of the FTC’s Bureau of Consumer Protection, noted, “Many of us want to buy products that are made in the USA, and we trust companies like Williams-Sonoma to tell us the truth.… When a company falls short, we will hold it accountable.”

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