FTC Adds Teeth to the ‘Made in USA’ Rule

On July 1, 2021, the Federal Trade Commission (FTC) finalized a new rule which prohibits businesses from making unqualified claims that a product is made in the U.S. unless: (1) final assembly or processing of the product occurs in the U.S.; (2) all significant processing that goes into the product occurs in the U.S.; and (3) all or virtually all ingredients or components of the product are made and sourced in the U.S.

The new rule covers explicit and implicit claims that a product is made in the U.S. (e.g. representations that a product is “made,” “manufactured,” “built,” “produced,” “created,” or “crafted” in the U.S.). Other phrasing, such as “True American Quality”, or even putting an American flag on a product, may constitute an implicit claim of U.S. origin.

Unqualified “Made in USA” claims appearing on product labels clearly fall within the purview of the FTC’s new rule, and it arguably extends to similar claims appearing in printed advertisements, as well as advertisements disseminated via e-mail or other electronic means.

The new rule does not differ substantively from the FTC’s prior guidance regarding claims of U.S. origin. However, it will allow the FTC to seek monetary penalties of up to $43,280 per violation. The FTC hopes this stiff penalty will send a strong signal to would-be violators, but it noted that maximum penalties are not necessarily appropriate in every instance.

In conjunction with the FTC’s announcement, the U.S. Department of Agriculture announced that it will complement the FTC’s efforts with its own initiative on U.S. origin claims for products such as beef, and other agricultural products regulated by the Food Safety and Inspection Service. Its efforts in this area are ongoing.

If you have any questions regarding compliance with the FTC’s new “Made in USA” rule, please contact one of our Advertising, Promotions & Social Media attorneys.

Special thanks to Patrick F. Ganninger for his contributions to this article.