United States: News On E-Warranty Bill And "Made In USA" Claims

Last Updated: September 23 2015
Article by Karen F. Lederer and Eric L. Unis

On September 8, 2015, the Senate passed a bill, earlier passed by the House, that would amend the Magnuson-Moss Warranty Act to require the FTC, within one year, to revise its Mag-Moss implementation rules to permit a manufacturer to make its warranty terms available on its website, rather than enclosing it with the product. A manufacturer choosing to do this must provide, on the product, on the product packaging or in the product manual, instructions on how to obtain the warranty terms from its website AND the manufacturer's phone number, address or other reasonable non-Internet based means of obtaining the warranty terms.  

This will not affect the obligation of a manufacturer to make the terms available for pre-sale inspection at any brick and mortar store, during any in-home sale, or in any catalog offering the product.

The E-Warranty bill comes on the heels of the FTC's announcement last spring of the results of its routine review of the Mag-Moss rules. At that time the FTC declined to agree with commenters that offline sellers can comply with the pre-sale availability rule by advising buyers of the availability of warranties on the warrantor's website. The E-Warranty bill does not change that. But the FTC did not even consider or discuss revising the rules to permit digital distribution upon sale, the very thing the E-Warranty bill will permit.

Note that the E-Warranty bill is not self- executing. The FTC first has to amend its rules. (And the President has to first sign the bill.)

California Amends "Made in USA" Law but Class Action Threat Remains

On September 1, 2015, Governor Jerry Brown signed a bill amending California's long-standing "Made in USA" law, bringing it in closer harmony with the federal "Made in USA" standard set by the FTC. Since 1961, California has been the only state with its own statute specifically regulating country of origin claims. California law had provided that 100 percent of a product had to be manufactured in the United States for it to be marketed as "Made in USA." The amended law, which goes into effect January 1, 2016, loosens that standard and allows businesses to label products as "Made in USA" if the finished product is made, manufactured, or produced domestically with foreign components constituting not more than 5 percent of the final wholesale value of the manufactured product. If the manufacturer shows that it cannot make the foreign components in the United States or obtain them domestically, 10 percent foreign content is allowed. The amended California law sets forth a standard that is similar to the FTC's "all or virtually all" standard, which allows some leeway for negligible foreign content. 

The amendment to California's Business Code and Professions Code section 17533.7 comes amid a flurry of consumer class actions filed in California concerning "Made in USA" claims. Many of these cases involve apparel, but any consumer product sold with a "Made in USA" label is a potential target. For example, a putative class action was filed this month in the Southern District of California against Church & Dwight, the manufacturer of Trojan condoms, for making allegedly false claims that its condoms were American-made. The plaintiff alleges that, when purchasing the condoms from Amazon.com, he believed that he "was purchasing a superior quality product, supporting U.S. jobs and the U.S. economy, and also supporting ethical working conditions." While the law in California may soon be less rigorous, both California and the FTC still set a very high bar for substantiating "Made in USA" claims and such claims will continue to attract attention from plaintiffs' class action lawyers and the FTC.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Karen F. Lederer
Eric L. Unis
 
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