As the saying goes, some people wear their hearts on their sleeves. Many consumers who feel strongly that “Made in America is important” really mean it. In other words, when they choose among competing derby hats, fedoras, pork pie hats or gas hats, they may choose a hat made by the Pennsylvania-based Borman Hat Company and advertised Mark “Made in America is important – choose America.” An FTC complaint challenging the “Made in the USA” claim as deceptive is only one facet of the action against Borman.
Bollman is a leader in the hat industry, selling hats under such brands as Kangol, Betmar, Bailey Western and Country Gentleman. The company’s products and advertising often carry the “Made in America Matters—Choose American” seal. Although the company claims its hats are “Made in the USA since 1868,” “Made in the USA for 100 years or more,” or #madeintheusa, the FTC claims that more than 70 percent of its hat styles are fully imported as finished products. Of the remaining styles, many contain important imported content. Therefore, the FTC erred in challenging these statements.
While Borman features “Made in America Matters – Choose America” in its own marketing, it has also expanded its business beyond hats to seals. Borman established a wholly owned subsidiary, SaveAnAmericanJob, LLC, and jointly conducted business under the name “American Made Matters” to market the seals to other companies. In marketing the seal, respondents stated, “You will increase sales to consumers and businesses actively seeking to purchase American-made products.”
According to the complaint, Bollman and its SaveAnAmericanJob subsidiary grant the seal to any company that claims to have an American manufacturing facility or a product bearing an American origin label and meets two membership requirements: 1) The company must self-certify that it At least one product has at least 50% of the cost incurred in the United States and has final assembly or modification in the United States, and 2) the company must pay an annual license fee of $99. Borman and SaveAnAmericanJob will then promote member companies on its American Made Matters website and highlight them on social media.
The FTC said that in many cases, respondents stated directly or implicitly that companies and products using the American Made Matters designation (or advertising membership on the American Made Matters website) had undergone independent, objective evaluations to Meet membership standards. But according to the complaint, companies approved to use the Made in America designation were not evaluated to ensure compliance with that or any other standard. They just proved themselves.
A closer look at the complaint illustrates the FTC’s concerns. First, the lawsuit alleges that the defendants made false “Made in the USA” claims about their own products. (Keep in mind that products sold with this claim must be made entirely or substantially entirely in the United States, according to the Federal Trade Commission’s Enforcement Policy Statement on U.S. Origin Claims.)
Additionally, the FTC alleges that by using the “American Made Matters” seal, defendants conveyed the message that an independent organization had reviewed and endorsed their products as “Made in the USA” and that others authorized to use the “American Made Matters” mark were Independent and objective. Evaluate compliance with membership standards. The complaint also alleges that respondents represented on their websites and social media that products sold by American Made Matters members were all or nearly all made in the United States — a claim the FTC said was false or unsubstantiated.
Under the proposed settlement, defendants are prohibited from making not qualified Claim that their products originate in the United States unless they can prove that the final assembly or processing of the product (and all significant processing) took place in the United States, and that all or substantially all of the ingredients or components of the product are manufactured in the United States and sourced in the United States (in the words of the FTC Said, “unqualified claim” means a statement without any warning or qualification.) Any qualified Made in America claims must clearly and conspicuously disclose the extent to which a product contains foreign parts, ingredients or processing.
What’s more, when using “American Made Matters” on their products, respondents must clearly disclose any association with the seal. If they endorse another company’s products as American-made, they must clearly disclose any ties to that company. The proposed order also provides protections to ensure that the “Made in the USA” designation is based on independent and objective standards. Alternatively, if the respondent continues to grant seals based on self-certification, they must clearly disclose this fact in their seals and marketing materials.
The settlement is the latest in a series of cases the FTC has challenged “selfie seals,” which are allegedly deceptive certifications that are not supported by objective standards. In addition to substantiating their “Made in the USA” claims, companies should be careful when using certifications because they can give consumers a deceptive impression of what the seal represents. (For more information, read the Guide to Complying with U.S. Manufacturing Standards and FTC Approval.)
The FTC is accepting public comments on the proposed settlement until February 23, 2018.
