The Federal Trade Commission (FTC) has approved final consent orders in two cases in which the companies allegedly falsely claimed their products were made in the United States.
Background on the Companies
A New York-based company, Patriot Puck, wrapped its hockey pucks in American flags. Though they were mostly manufactured in China, the company promoted them as the “The Only American Made Hockey Puck!” Other promotional and marketing materials included these phrases: “Made in America,” “Proudly Made in the USA,” and “100% American Made!” The FTC went out four companies doing business as Patriot Puck.
The California-based tactical gear companies, Sandpiper and PiperGear, claimed in marketing materials that their backpacks, travel bags, wallets, and other products were all or virtually all made in the United States.
However, more than 95 percent of Sandpiper’s products were imported as finished goods, and approximately 80 percent of PiperGear’s products were imported as finished goods or contained significant imported components. According to the FTC, the company hid the truthful country-of-origin on the back of tags of some of the wallets imported as finished goods. Also, the company inserted cards that prominently displayed false U.S.-origin claims, the complaint alleged.
Patriot Pucks went out of business shortly after the FTC first ruled on the claims in September. Sandpiper was sold to a new owner last fall while the company was involved in litigation with the FTC.
The companies face a $40,000 penalty per violation if they are caught making false claims in the future. Since the goods were not more expensive than similar products sold by competitors, who also imported their products but did not falsely label them as American-made, were not required to pay any monetary penalties.
A Closer Explanation on the FTC’s Final Orders
The Patriot Puck companies, as well as Sandpiper and PiperGear, are prohibited from making unqualified U.S.-origin claims for their products. They can only claim their products were made in America unless they can show that the products’ final assembly or all significant processing takes place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States, according the FTC’s final orders.
Any qualified products that are made in America must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, and/or processing.
To claim that a product is assembled in the United States, the respondents in both cases must ensure that it is last substantially transformed in the United States, its principal assembly takes place in the United States, and United States assembly operations are substantial.
The orders also prohibit the respondents from making untrue, misleading, or unsubstantiated country-of-origin claims in their marketing materials about any product or service.
The FTC has an Enforcement Policy Statement on U.S. Origin Claims, as well as other business guidance on how companies can adhere to the “Made in the USA” standard.
Any claims that a business makes about its products must be true or those sellers can expect financial punishments or other penalties. Processors also need to ensure that they are keeping track of what businesses are saying about their products and that they are in no way misleading customers. Processors also can pay the price if they are not closely monitoring the businesses the do business with.
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