Neal Fortin explains what is new (and not new) in the FTC's rule designed to stop fraudulent “Made in the USA” claims.
The Federal Trade Commission (FTC) recently finalized a new rule designed to stop fraudulent “Made in the USA” claims. Under the rule, marketers making unqualified “Made in USA” claims on labels must be able to prove that their products are “all or virtually all” made in the United States.
The rule does not impose new requirements but rather codifies the FTC’s enforcement policy that was in effect for decades. However, the rule codifies a broader range of remedies for the FTC, including the ability to seek redress, damages, penalties, and other relief from those who lie about being Made in the USA. The rule will enable the FTC Commission for the first time to seek civil penalties of up to $43,280 per violation.
The rule prohibits 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, and 3) all or virtually all ingredients or components of the product are made and sourced in the United States. However, the final rule has a provision allowing marketers to seek exemptions if they have evidence showing their unqualified Made-in-USA claims are not deceptive. 16 C.F.R. § 323.
The rule applies only to labeling claims. On the other hand, the FTC will continue to bring enforcement actions against marketers that make deceptive U.S.-origin claims falling outside the rule under Section 5 of the Federal Trade Commission Act.
The rule does not supersede, alter, or affect any other federal statute or regulation relating to country-of-origin labels. The Food and Drug Administration and the U.S. Department of Agriculture have requirements regarding “Made in USA” labeling claims, and both agencies have primary jurisdiction over the labeling of their regulated products.
Reference: FTC, Made in USA Labeling Rule, 86 Federal Register 37022-37035, July 14, 2021.