The Federal Trade Commission recently looked into whether Kaisa USA, the maker of pads and other office products, made misleading U.S.-origin claims. First, the FTC was concerned that the company published an online catalog that included "Made in USA" claims on every page, even on pages that included products that were imported. Second, the FTC also expressed concerns that Kaisa's claim that certain composition books were "Made in USA" was misleading because, even though the paper was made in the United States, and the books were assembled in the United States, the covers were not.
According to the FTC's Enforcement Policy Statement on U.S.-Origin Claims, in order to make an unqualified "made in USA" claim about a product, the advertiser must be able to substantiate that the product was "all or virtually all" made in the United States. This long-standing FTC policy was also recently codified in its Made in USA Labeling Rule. The Rule covers claims made on product labels, as well as claims made in catalogs (including e-commerce websites).
Although the FTC ultimately decided not to take action against Kaisa, the FTC's closing letter noted a few things that all advertisers making U.S.-origin claims should be aware of.
As it has in many other closing letters, the FTC reiterated its position that marketers should be careful about making U.S.-origin claims when advertising multiple products, unless all of the products advertised were made here. The FTC wrote, "The Commission has explained that, unless marketers specify which products are covered or directly link claims to particular products, consumers generally interpret U.S.-origin claims in marketing materials to cover all products advertised in those materials."
There's no bright-line test for when a product satisfies the FTC's "Made in USA" standard. The factors that the FTC considers, when determining whether a product is made here, include the portion of the product's total manufacturing costs that are attributable to U.S. parts and processing and how far removed from the finished product any foreign content is. Here, while the FTC acknowledged that the cost of the cover of the composition book was "small relative to the Company's overall costs to manufacture a composition book," the agency said that it felt that, "a cover is not far enough removed in the manufacturing process from the finished product to be of little consequence, and it is a significant part of the final product." (Contrast this with the FTC's position that marketers can claim that a product was made here, even if the incidental, discarded packaging was not.)
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