Earlier this month, the FTC issued a new rule to deter what it’s calling “rampant Made in USA fraud.” The move comes amid countless products with dubious Made in USA markings being targeted to consumers through social advertising or via product tags on goods sold at brick and mortar retailers. The new rule is a codification of previous guidance into an official and enforceable rule that will, for the first time, allow the FTC to pursue civil penalties of up to $43,280 per violation of the rule.
“The final rule provides substantial benefits to the public by protecting businesses from losing sales to dishonest competitors and protecting purchasers seeking to purchase American-made goods,” said FTC Commissioner Rohit Chopra in a statement accompanying the ruling. “More broadly, this long-overdue rule is an important reminder that the Commission must do more to use the authorities explicitly authorized by Congress to protect market participants from fraud and abuse.”
The full details of the rule were formally published in The Federal Register on July 14, 2021.
Key details are that marketers cannot make unqualified Made in USA claims on labels unless:
- Final assembly or processing of the product occurs in the United States;
- All significant processing that goes into the product occurs in the United States; and
- All or virtually all ingredients or components of the product are made and sourced in the United States.
Approved qualifiers include wording such as “Made in the USA of U.S. and China components” or similar that is truthful and not misleading to retailers or consumers.