The Federal Trade Commission (FTC) continues to focus its attention on “Made in the USA” claims, and this time the agency has fixed its gaze on a Florida-based company and its principal, whose claims regarding patriotic and Second Amendment-themed gifts were out of bounds.
In a recent complaint, the FTC alleged that the business, ExotoUSA LLC d/b/a/ Old Southern Brass, specifically targeted servicemembers and veterans by falsely stating that Old Southern Brass was a veteran-operated business that donated 10% of all sales to military charities. The FTC also charged that Old Southern Brass falsely represented, through express and implied claims, that all of its products were made in the United States. Statements such as “All of our products are made right here in the United States of America” directly contradicted evidence that many of the company’s products were either wholly imported from China or contained a significant amount of imported content.
Similarly, statements such as “As a veteran-operated business in the United States, our mission is to give back to fellow American patriots who have served and protected our country” and “American Owned Veteran Operated,” paired with a “10% Donated to Military Service Charities” icon on the company webpage banner, created a clear claim that the company had an association with the U.S. military. According to the FTC, that representation was false.
The defendants chose to settle. An agreed-to proposed Decision and Order imposes a monetary judgement of over $4 million against all defendants—most of which is suspended upon the payment of $150,000 because of a current inability to pay. The settlement further prohibits defendant from making false “Made in the USA” claims going forward, and any other false or misleading claims.
What can we learn from this proposed order?
For any “Made in the USA” claims, and applying the FTC’s Enforcement Policy Statement on U.S. Origin Claims and Made in USA Labeling Rule, the proposed order specifically instructs that a company should avoid making unqualified U.S.-origin claims for any product unless the advertiser can show that all significant processing of a product, along with its final assembly and processing, takes place within the United States, and the advertiser can show that all or virtually all ingredients or components are both made and sourced in the U.S.
Similarly, any qualified “Made in the USA” claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, or components or is the result of foreign processing, as applicable.
Finally, if a product is claimed to be assembled in the U.S.,
- it must be finally substantially transformed in the U.S.
- its principal assembly must take place in the U.S.
- U.S. assembly operations must be substantial
This judgment of more than $4 million against a company and its principal serves as an important reminder of the risks related to overly aggressive “Made in USA” claims.
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