FTC Proposed Made in USA Rule Allows Civil Penalties

In efforts to further regulate how companies advertise products, the Federal Trade Commission issued a proposed Made in USA Rule that would penalize businesses for false “Made in USA” claims. Under the rule, violations could result in civil penalties up to $43,280 each.

Under the Rule, companies are prohibited from making unqualified Made in USA claims unless they meet three requirements:

  1. The 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.
  3. All or virtually all ingredients or components of the product are made and sourced in the United States.

While most people don’t know what actually qualifies a brand as American-made, the rule defines “Made in USA” as “any unqualified representation, express or implied, that a product or service, or a specified component thereof, is of U.S. origin, including, but not limited to, a representation that such product or service is ‘made,’ ‘manufactured,’ ‘built,’ ‘produced,’ ‘created,’ or ‘crafted’ in the United States or in America, or any other unqualified U.S.-origin claim.”

The agency’s report included that, while “Made in USA” claims can be considered true under various circumstances, 3 out of 5 consumers agree that a domestic origin claim should mean that all parts of a product, even raw materials, are made in the U.S. Without clear guidelines on Made in USA claims, a significant amount of consumers will be deceived by unqualified claims.

The rule, along with others passed this year, are a step in the right direction for origin labeling laws. last year, the FTC found numerous cases of companies labeling products as “Made in USA” when they were manufactured in other countries–they received a warning with no fines imposed. Now, manufacturers will be held accountable for false claims and advertising schemes.

The FTC report states that a large number of Americans prefer domestically manufactured products due to the “quality of goods, promotion of U.S. jobs, social responsibility, and, to a lesser extent, general patriotism.”

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