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The Do’s and Don’ts of Country-of-Origin Labeling to Avoid FTC Fines


FTC fines against companies with misleading or deceptive country-of-origin labels

You may have heard about the recent case between the Federal Trade Commission (FTC) and two large retailers, Macy’s and J.C. Penney. The FTC alleged that both companies were falsely labeling products with made-in-USA claims when most of those products were made in other countries. As a result, both companies were fined millions of dollars.

It's no secret that many consumers look to the origin of a product when making purchasing decisions. The Federal Trade Commission has stepped in with its “all or virtually all standard," meaning products bearing "Made In USA" must be truthfully labeled and adhere strictly to FTC regulations regarding foreign content. Consumers who can identify with this claim will appreciate knowing they are investing in quality American-made goods - proving how important the country of origin remains for businesses today.


FTC fines against companies with misleading or deceptive country-of-origin labels

When it comes to a "Made in USA" claim, stringent FTC regulations require that any non-automobile or textile item must be “all or virtually all” domestic – so businesses should ensure they meet the mark prior to using this powerful marketing declaration.

The U.S has two major rules regarding Country of Origin Labels for Textiles and Automobiles: The Textile Fiber Identification Act requires that 'Made in USA' be stated if the product is entirely US-made - with imported components specified to indicate their county of origin/processing; while under American Automobile Labeling Act, all cars sold must state where it was assembled as well its overall foreign parts content along with country-specific engine/transmission information.


When making marketing statements on packaging and advertising, it is important to ensure accuracy or risk hefty fines from the TFC. This was recently showcased in their legal suit against Electrowarmth - a reminder that credible claims are essential!

FTC fines against companies with misleading or deceptive country-of-origin labels

The FTC recently took action against the company Electrowarmth Products and its owner for deceivingly claiming their textiles are made in the United States when they were actually wholly imported from China. An investigation concluded that these misleading ad campaigns violated both U.S laws of textile origin identification regulation and Federal Trade Commission rules, revealing a move by Electrowarmth to cut costs by shifting production overseas while still labeling items as “Made in USA” or "Made in America."

The FTC issued a consent order, preventing the company from using deceptive practices in its product labeling. As part of this resolution, they have been required to make clear disclosures concerning which countries provided materials for products subject to TFPIA regulations and provide reports on compliance efforts. Additionally, an $815,809 monetary judgment has been imposed upon them as well.


For more information on product labeling compliance visit www.FTC.gov. For assistance with product marketing or to request a consultation, visit 154 Agency at www.154Agency.com.

 

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