The Federal Trade Commission (the “FTC”) is charged with the task of determining when a product can be labeled “Made in America.” This is part of the FTC’s larger task of preventing deception and unfairness in the marketplace. The FTC routinely brings enforcement actions against products that use false or misleading claims to deceive consumers into thinking it is of U.S. origin.
While certain items, such as automobiles, wool and fur products, must clearly state the amount of the product made in the U.S.A. (known as the U.S. content), most other products are under no obligation to have any such statement. However, if a manufacture chooses to make a claim about the amount of U.S. content, that manufacture must comply with the FTC’s “Made in America” policy. This policy applies to all products advertised or sold in the U.S. (except for those subject to other special labeling laws) which contain U.S. origin claims on the product or on its labeling, advertising or promotional materials. This policy extents to all forms of marketing, including digital or electronic (e-mail) marketing.
In order to receive the “Made in America” designation, a product must be able to prove that “all or virtually all” of its components were made in the U.S.A. The term “all or virtually all” requires that all of the significant parts and all of the processing that went into the product, must be of U.S. origin. The final product should contain no, or a very minor amount of, foreign content. Additionally, the product’s final assembly or processing must take place within the U.S.A.
A manufacturer can try to make an express claim or an implied claim under the “Made in America” policy about their product(s).
Express claims are easy to identify, i.e. “Made in the U.S.A.”, “U.S.A.”, or “Our products are American-made”, etc. Implied claims are harder to identify; the FTC will often focus on the overall impression of the advertisement or label to determine if a claim is being made. It is common for the FTC to determine that certain U.S. symbols or geographic references convey a claim of U.S. origin. Sometimes a single reference alone is sufficient and other times combination of images or phrases (i.e. a picture of a U.S. flag or U.S. map, references to U.S. plant location, etc.) is required to give the impression of U.S. content.
According to the FTC, there are currently four (4) types of “Made in America” claims that can be made: (1) Unqualified Claims; (2) Qualified Claims; (3) Comparative Claims and (4) Assembled in the U.S. claims.
An “unqualified claim” is a claim that indicates the item at issue is of domestic origin (made in America), that virtually all of the parts of the item were made in the U.S.A. and that it was assembled in the U.S.A. An unqualified claim requires no explanation, qualification or limitation to keep it from being untrue. When making an unqualified claim, a manufacture must have a reasonable belief, supported by competent and reliable evidence, that the claim is true.
A “qualified claim” is one that requires an explanation or qualification in order to avoid deceiving others. A qualified “Made in America” claim will describe the extent, amount and/or type of a product’s content that is not domestic (i.e. 60% U.S. Content, made in the U.S.A. of U.S. and imported parts, etc.). A qualified claim is appropriate for products that include U.S. content or processing but do not meet the criteria for an unqualified claim. Any claims that a particular manufacturing or other process was performed in the U.S.A., or that a particular part was manufactured in the U.S.A. must be truthful, substantiated and clearly refer to the specific process or part (not to the general manufacturing of the product) to avoid implying that more U.S. content than exists. General terms, such as produced, created or manufactured, should be used very carefully as they tend to indicate the product in general and fail to imply that U.S. content is limited to a part or process.
A comparative claim describes the U.S. content of a product in comparison to another similar (or specific) product and is based on meaningful differences in the U.S. content between the products. These claims must be truthful, substantiated and presented in a way that makes the basis for comparison clear (i.e. whether the comparison is to another brand or to a previous version of the same product).
The final type of claim is an “Assembled in the U.S.A.” claim, which is allowed when a product
includes foreign components but the principal assembly takes place in the U.S.A. and that the assembly is substantial. Additionally, the FTC requires that the products’ last “substantial transformation” have occurred in the U.S. The term “substantially transformed” means that the product or part has been changed as the result of a manufacturing or processing operation so that: (1) the good(s) or material(s) is converted from a good that has multiple uses into a good or material that has a limited uses; (2) the physical properties of the good or material are changed to a significant extent; (3) the operation undergone by the good(s) or material(s) is complex by reason of the number of processes, material, the time involved and the skill level required to perform those processes; or (4) the good(s) or material(s) loses its separate identity in the manufacturing or processing operation.
Should you have any questions about the FTC’s “Made in America” policy or how it can affect you or any other laws that may affect your business, or would like to schedule a free initial consultation, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.
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