Reacting to consumers’ concerns about issues such as unemployment, the trade deficit, and world events, advertisers often want to market their products as having been “Made in the USA.” If you’re planning to make patriotic claims for one of your clients, it’s important that you understand Federal Trade Commission (“FTC”) rules on when you can say that a product is American-made.
FTC Standard The FTC’s “Enforcement Policy Statement on U.S. Origin Claims,” issued in 1997, sets forth the FTC’s view on when it is proper to claim that a product is “Made in the USA.” The general rule is that if you want to make a U.S. origin claim, you must have proof that “all or virtually all” of the advertised product is made in the United States. The rule doesn’t just cover express claims, such as “our products are American made.” It covers any implied claims that consumers may reasonably understand you to be making. For example, if a commercial depicts a company’s U.S. factory, with American flags waving prominently in the background, with a super promoting “American Quality,” consumers may very well believe that you are claiming that the company’s products are made in the Unites States.
What does “all or virtually all” mean? The FTC says that if you want to claim that a product is American made, then all significant parts and processing that have gone into the product must be of U.S. origin. The product may only contain a negligible amount of foreign content. The FTC also says that a “Made in the USA” claim may not be made if the final assembly or processing of the product didn’t take place in the United States. The FTC also considers other factors, such as what percentage of the total manufacturing costs were from U.S. parts and processing and how far removed the finished product is from any foreign content that may have been used.
You may be able, then, to claim that a computer is “Made in America,” even if imported steel is used in making one part of a small component of the disk drive, since the foreign content was a very small part of the total cost of the computer and was used several steps back in the manufacturing process. On the other hand, it probably would be inappropriate to advertise a steel wrench as having been made in the U.S. if the steel was imported. The FTC has said, however, that advertisers may make qualified “Made in the USA” claims — “made in the USA from imported parts,” for example — so long as the claims are accurate.
FTC Enforcement The FTC has a long history of going after marketers when it believes that its “Made in the USA” standard has been violated. The Stanley Works (“Stanley”), a tool manufacturer, recently agreed to pay more than $200,000 to settle FTC charges that it falsely claimed that its Zero Degree Gearless Ratchet Wrenches were made in the United States. The FTC alleged that Stanley marked or labeled the wrenches with statements such as “Rachet made in USA” or “USA,” even though they included substantial foreign material. In announcing the settlement, Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection, said “Many consumers rely on Made in the USA claims when choosing products. They expect those claims to be truthful.”
So, unless you want the FTC to throw a wrench into your next advertising campaign, before licensing a recording of “America the Beautiful” to play in your next spot, as a “Buy American” banner waves in the background, while extras dressed in red, white, and blue are watching a baseball game and eating apple pie, make sure that the product that you’re advertising really is “Made in the USA.”
This column presents a general discussion of legal issues, but is not legal advice and may not be applicable in all situations. Consult your attorney for legal advice.
Jeffrey A. Greenbaum ESQ is a partner at Frankfurt Kurnit Klein & Selz, New York. If you have a suggestion for a topic to be covered in a future column, send an e-mail to jagreenbaum@fkks.com.
