Made in America Claim: Three cheers for what is said to be correct and true

Two products sit side by side on a store shelf, but only one is labeled “Made in the USA.” For many consumers, this is an important consideration when deciding what to buy. That’s why the FTC wants to ensure that a company’s “Made in the USA” claims — like all objective product statements — are true and supported by appropriate evidence. We asked FTC attorney Julia Ensor some of the questions we’re hearing from companies regarding “Made in the USA” claims.

Does my company have to disclose U.S. ingredients in products we sell in the U.S.?

Julia: It depends on the product. Under specific laws, U.S. ingredients in automobiles, textiles, wool and fur products must be disclosed. Beyond that, there is no general legal requirement that companies disclose the extent to which their products are made in the United States. That is, Section 5 of the FTC Act—the comprehensive prohibition on unfair or deceptive acts or practices—applies. So if you say your product is made in the USA, it must be true. In 1997, the FTC issued a U.S. Origin Statement Enforcement Policy Statement to provide guidance to marketers. We also have a brochure, Made to USA Standards, which explains this in more detail.

So when can a company say a product is made in the United States?

Julia: To make an unqualified “Made in the USA” claim, your product must be “wholly or substantially” made in the United States, and you must have evidence to support the claim before it can be mentioned on the product, packaging, or advertising. According to the enforcement policy statement, “all or substantially all” means all significant components and processing in the product must originate in the United States. Products should contain no or negligible extraneous ingredients. (A side note explains what we mean by a “nonconforming” statement. In FTC terms, a nonconforming statement is a statement without any warnings or limitations.)

What evidence do I need before filing a Made in America claim?

Julia: Before making any objective statement, including a “Made in the USA” claim, the manufacturer or marketer must have a “reasonable basis” to support the claim. In the context of Made in America, this means you need to have sufficient and reliable evidence that all or nearly all of your products are made in the United States.Another important consideration is that advertisers can clearly communicate claims to consumers and hint. Depending on the context, U.S. symbols or geographic references (e.g., the U.S. flag, U.S. map outlines, or references to U.S. headquarters or factory locations) can be used alone or in combination with other phrases or images to convey a “Made in the USA” claim. Suggesting a false “Made in the USA” claim is just as illegal as making the false claim outright, so always proceed with caution.

Our products contain many parts. In this case, how does the FTC apply the “all or substantially all” standard?

Julia: First, for your product to be American-made, final assembly or processing must occur in the United States. Additionally, per U.S. Customs Service regulations, you will need to demonstrate that your product has recently been substantially modified in the United States. But that’s not all we focus on. We will also consider factors such as how much of a product’s total manufacturing costs can be allocated to U.S. parts and processing, how far away any foreign ingredients are from the finished product, and how important the foreign ingredients or processing are to the overall functionality of the product. product. Here are two contrasting fact patterns from Complying Made in America Standards that may help explain this:

example. One company manufactures propane grills at a facility in Nevada. The product’s major components, including the gas valve, burner and aluminum housing, are made in the United States. The grill’s knobs and pipes were imported from Mexico. Substandard “Made in the USA” claims are unlikely to be deceptive because the knobs and tubing account for only a small portion of the total manufacturing cost of the product and are an insignificant part of the final product.

example. The lamp is assembled in the USA from American made brass, American made Tiffany style shade and imported base. The lamp base represents only a small portion of the total cost of manufacturing a lamp. Substandard “Made in the USA” claims are deceptive for two reasons: the base is not far enough away from the finished product during the manufacturing process to have much of an impact, and it is an essential part of the final product.

What about raw materials? How does the FTC include them in its “all or nearly all” assessment?

Julia: We look at how much of the product’s cost the raw materials account for and how far removed they are from the finished product. As the FTC points out, “Even if the raw material is not native to the United States, if the imported material constitutes the entirety or essence of the finished product…” . . , which may mislead consumers by placing an unqualified “Made in the USA” label on the final product. ” Here are examples of compliance with U.S. manufacturing standards:

example. If the gold in a gold ring is imported, the ring’s substandard “Made in the USA” claim is deceptive. This is because gold may represent significant value relative to the finished product, and because gold, as a component, is only one step removed from the finished product. In comparison, consider the plastic in the plastic casing of a clock radio made in the United States. If the plastic casing is made from imported petroleum, then a “Made in the USA” claim may be appropriate because the petroleum is far enough away from the finished product and is only a negligible part of it.

Our products do not meet the “all or nearly all” criteria. Even so, is there a way we can highlight what’s inside? yes made in America?

Julia: If your product was last substantially modified in the United States without further processing abroad, you can make a “qualified” or limited “Made in the USA” claim to highlight the work you did in the United States without Deceiving consumers. Where appropriate, a company might claim “60 percent American content,” “Made in the United States with American and imported parts,” or “The sofa is assembled in the United States from Italian leather and Mexican frames.” But manufacturers and marketers should be careful when making such claims. Conformity claims should be avoided unless the product contains significant U.S. ingredients or U.S. processing. Remember, like any other statement, a qualified Made in the USA claim must be true and supported.

What should I do if a competitor violates U.S. manufacturing standards?

Julia: Please email MUSA@ftc.gov or call 202-326-2996. We can’t tell you about ongoing investigations, but information from competitors can help law enforcement focus on companies whose conduct deserves scrutiny. If you suspect import or export fraud (for example, removing a required foreign origin label before the product reaches the consumer), file an online complaint with the U.S. Customs Service. Another option is to contact your state’s attorney general or file a challenge with the National Advertising Division of the Council of Better Business Bureaus. Additionally, the Lanham Act may give companies the right to sue competitors in certain circumstances.

Please see the Made in the USA page of the Business Center for additional resources.