Are we the only ones who remember CW McCall’s new song “Convoy”? To borrow a lyric from one of the hit songs about truckers, “Mercy Lives,” the Federal Trade Commission is “crackdown” on false claims that imported products are made in the United States. The agency just announced a settlement with Electrowarth Products, LLC and its owner, Daniel W. Grindle, claiming their “Made in the USA” claims for heated truck pillow top mattresses were complete nonsense.
At one point, Electrowarth used U.S.-made textiles to make truck mattresses, the lawsuit says. But as a cost-cutting measure, the company moved production to China in 2019 and stopped using U.S.-made textiles. Despite the significant changes in production, Electrowarth still describes the new Chinese-made tampons as “Made in the USA,” “Made in the USA since 1939” and “Made in the USA” – claims that appear on product labels, packaging or on the company’s Facebook page.
The FTC said these false statements violated the Textile Fiber Product Identification Act, the Textile Products Rule and the FTC Act. To resolve the case, Electrowarth and Grindle have agreed to a proposed order prohibiting them from making unqualified U.S. origin claims for any product unless they can demonstrate that final assembly or processing (and all significant processing) occurred in the United States and that all or nearly all of its ingredients or components are manufactured and sourced here. Any qualified “Made in the USA” claim must clearly and conspicuously disclose the extent to which the product contains foreign parts, ingredients, components or processing. What about assembly in the USA rep? The company must ensure that the last substantial modification of the product took place in the United States, that its main assembly takes place here, and that there is a significant amount of assembly operations in the United States.
The $815,809 money judgment was stayed due to Electrowarth and Grindle’s inability to pay. But if they make any material misrepresentation about their financial condition, the amount becomes immediately due. Once the proposed settlement appears in the Federal Register, the FTC will accept public comments for 30 days.
What implications does this have for other companies? Don’t overlook the fact that modifications to your manufacturing process may cause your Made in the USA claim to change. The FTC has resources to help simplify your compliance efforts.
