Privacy & Advertising Alert: FTC Dings Company for Peddling Made-in-USA Seals

What’s in a name? If you’re a company and your name is “Made in the USA,” your marketing had better smell at least as sweet as the Federal Trade Commission’s (FTC) Made in USA Standard, or so Made in the USA Brand, LLC (MITUB or the Company) discovered. The FTC yesterday (July 22, 2014) announced (proposed order here) that MITUB agreed to settle the FTC’s charges that the Company deceived consumers by allowing its clients to use its Made in USA certification seal (see picture) on their products without either verifying the country of origin of customer products bearing the seal or clearly disclosing that MITUB’s clients were self-certifying.

The Company markets itself as the “only certified non-required brand enhancer or identifier of goods made in the USA” and charges companies $250 to $2,000 to use its “Made in USA” certification mark for one year. In a promotional flyer, the Company said: “the Certification Mark is available to be downloaded by U.S. businesses that meet the accreditation standards based on the Federal Trade Commission’s regulations for complying with Made in USA origin claims.” The FTC’s Enforcement Policy Statement on U.S. Origin Claims states that products advertised or labeled as “Made in the USA” must be “all or virtually all” made in the USA.

According to the FTC’s complaint, the Company falsely claimed that it independently evaluated whether customer’s products met its certification claims, and that the businesses using its logo were in compliance with the FTC’s standards. The settlement prohibits MITUB from claiming that its clients meet the Company’s accreditation standard unless MITUB conducts a thorough investigation of the product or prominently discloses on its logo and all promotional material that the clients are self-certifying. Further, the Company may not market any good, product, or service as being of U.S. origin unless it has substantiation to support the U.S.-origin claim or, in connection with MITUB’s “Made in USA” certification mark, prominently discloses in all promotional materials that clients may self-certify. MITUB also agreed broadly not to provide its clients with the means to deceive consumers.

As America continues to recover from the recession that began in 2007 and 2008, Made in USA claims appear to be increasing in popularity. In considering whether to make an unqualified or qualified “Made in the USA” claim, manufacturers, importers, and innovators should keep in mind not only the FTC’s Made in USA Standard but also its Endorsement Guides and a California law that has raised thorny questions for product makers, marketers, and sellers, especially as it has been interpreted by the state’s courts.

California prohibits the sale of merchandise with a Made in USA claim if the item “or any article, unit, or part thereof has been entirely or substantially made, manufactured, or produced outside of the United States.”  Cal. Bus. & Prof. Code § 17533.7. California courts have construed the prohibition to apply if any foreign component is present in a product, even if the component is only a screw.

Despite these complexities, consumer demand, and even a company’s identity as proudly American, mean that Made in USA claims will resonate in the marketplace. Companies making these claims must take care to ensure that they comply with applicable legal requirements. Common sense is a must, as well, where certifications and seals of approval are concerned. Note to certifiers: make sure you actually have standards and practices, and tell the truth about what you are offering. Note to seal users: check out the certifying body to make sure they are legitimate, and actually do certify what they say they are certifying before you put their label on your products. Meaningless certifications hurt responsible businesses and may put you at risk of a legal violation as well. 

For more information about Made in USA claims, country of origin requirements, and other marketing matters, contact Sheila A. Millar at  millar@khlaw.com or 202 434-4143; JC Walker at walker@khlaw.com or 202 434-4181; or Tracy P. Marshall at marshall@khlaw.com or 202 434-4234.