Commission casts its shadow over two companies' all-American claims
Already?!
The beginning of the new year serves up two interesting cases of companies that ran afoul of the Federal Trade Commission (FTC) for allegedly false "Made-in-the-USA" claims.
Mad at Hatters
The FTC took aim at Pennsylvania-based Bollman Hat Company with a complaint filed on Jan. 23, 2018. The Commission claims that Bollman, while touting its patriotism using taglines like "Made in USA," "Choose American," and "Made in USA since 1868"—it even boasted a subsidiary named "SaveAnAmericanJob"—was peddling hats that were finished products before they were imported to the United States. The FTC estimates that 70% of Bollman's hat styles were made in foreign countries.
According to the Commission, Bollman, with what can only be described as Morissette-levels of irony, introduced a seal in 2010 labeled "American Made Matters," which it used to market its own products. But, per the FTC, the company was also licensing the seal to any company that claimed "it had a United States-based manufacturing factory or one product with a U.S.-origin label" and met several other decidedly non-onerous application requirements. Bollman charged applicants $99 in annual licensing fees.
Not OK Computer
Over the river in New Jersey, Maingear, a gaming computer manufacturer, was wrestling with a "built in the USA" inquiry of its own. During its investigation, the FTC claimed it discovered that "[a]lthough Maingear designs, finishes, tests, and supports its computers in New Jersey, the computers incorporate significant imported content"—which is a problem, since the Commission requires "all or virtually all" of the product to be built in the States.
The Takeaway
Bollman settled. Its agreement with the FTC bars it from making any unqualified claims about the American origin of its products. When it makes qualified claims, it is now required to clearly disclose how many foreign parts the labeled product includes.
And the "American Made Matters" seal triggered a provision in the settlement ordering Bollman to "disclose any material connection it has with any certification it uses to tout its products." In addition, the hat maker must seek independent and objective assessment of the origin of any product stamped with the seal—or disclose that the label is solely self-certified.
Maingear took a different tack, hoping to avoid anything worse than a closed inquiry by removing the offending "built in the USA" claims from its site, altering its materials to include tags like "designed in the USA" to convey the nature of the products' manufacture, and suspending related Google ads.
The moves were successful—the inquiry closed in mid-December 2017. But watchdog group Truth in Advertising did some digging and uncovered several instances of web copy and advertisements that remain festooned with "built in the USA" tags. We'll have to wait and see if the FTC takes notice, too.
The FTC has long been active in bringing deception claims based on inaccurate or misleading U.S. origin claims, and these companies could have avoided their mistakes had they paid attention to the FTC's Enforcement Policy Statement on U.S. Origin Claims that was issued in 1997, and the guidance for businesses it has issued.
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