FTC enforces new Made in USA Labeling Rule

With few exceptions, manufacturers and distributors are not required to disclose where products were made. But if they do and claim the products are made in the USA, they better tell the truth or the FTC will come calling.

The FTC issued a policy statement in 1997 outlining guidelines for making unqualified “Made in USA” or similar claims. In August 2021, it passed the Made in USA (MUSA) labeling rule which codified its guidelines and added more enforcement authority, including the ability to impose fines.

The agency filed its first complaint using its new authority in April when it challenged claims by Lithionics and its owner that the company’s lithium-ion cells are made in the United States. Lithionics designs and sells battery products for recreational vehicles, amusement park rides, marine applications, and low-speed electric vehicles. It claimed that its products are all or almost all made in the United States when in fact the lithium-ion cells are imported from China and other components are also imported.

The FTC says the company “doubled down” on the misrepresentations:

  • The merchandise was tagged with an image of the flag surrounded by the words “Made in USA.” Sometimes they added the phrase “Proudly Designed and Built in the USA”.
  • YouTube videos showed the owner affixing Made in USA labels to products.
  • The marketing materials included a table comparing the advantages of the company’s products against imported competing products.

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