News

Be Precise With Patriotic Labels

“Made in the USA” is an advertising claim that appeals to many American consumers as patriotic and as a stimulus to the American economy. In making such claims, however, manufacturers and marketers should take care to comply with regulatory standards for the truthfulness of any “Made in USA” labeling.

A basic tenet of advertising law is that a manufacturer or marketer may make any claim so long as the claim is truthful and substantiated. As such, use of the “American-made” label must be accurate according to the standards set forth by the United States Federal Trade Commission (“FTC”).

With very limited exceptions, there is no law that requires products sold in the United States to disclose information as to their actual American origin. Prominent exceptions to this rule under federal laws regulating particular industries are:

  • a “Made in USA” label must appear on most clothing and other textile wool household products if the final product is manufactured in the U.S. from fabric produced here, regardless of where materials earlier in the manufacturing process (yarn or fiber) come from;
  • the country of origin of imported furs must be disclosed on all labels and in all advertising; and
  • each automobile manufactured on or after October 1, 1994 for sale in the U.S. must bear a label disclosing (i) where the car was assembled; (ii) the percentage of equipment that originated in the U.S. and Canada; and (iii) the country origin of the transmission and engine. Additionally, the well-known Buy American Act requires that a product be manufactured in the U.S. from more than 50% American parts to be considered “Made in America” for government procurement purposes.

Aside from these exceptions, no law requires that products sold in the US be marketed or labeled as “Made in the USA” or have any disclosure about the amount of U.S. content. However, manufacturers and marketers choose to make claims about the amount of U.S. content in their products with the purpose of appealing to consumers and thus generating more sales, and when manufacturers or marketers make such claims about their products, their products must comply with the FTC’s ”Made in the USA” policy.

This policy applies to all products advertised and sold in the United States (except for those specifically subject to country-of-origin labeling by other laws). Such claims can be either express or implied. An example of an express claim is “made in the USA”. When determining an implied claim, the FTC focuses on the overall, or net, impression of the advertising, label or promotional material. Symbols or geographic references such as the flag and, outlines of a map of the USA may convey a claim of American origin.

When a manufacturer or marketer make an unqualified claim that a product is made in the USA, the FTC requires a “reasonable basis” to support the claim at the time the claim is made as well as reliable evidence to back up the claim that is product is “all or virtually all” made in the U.S., meaning that the product’s final assembly or processing occurred here. The FTC then considers how much of the product’s total manufacturing costs can be attributed to U.S. parts and processing and how far removed any foreign content is from the finished product.

A qualified “Made in USA” claim describes the extent, amount or type of a product’s domestic content or processing; this qualified claim indicates that the product is not entirely of domestic origin. For example, “60% US content” or “Made in USA of US or imported parts” are such qualified claims. These are appropriate when products include U.S. content or processing but do not meet the criteria for making an unqualified Made in USA claim. However, manufacturers and marketers must still take care to avoid overstating the actual domestic content of any product. Thus, qualified claims too must be truthful and substantiated. Such claims also must clearly refer to the specific process or part and not to the general manufacture of the product, to avoid implying more U.S. content than actually exists.

The use of a “Made in the USA” label is further complicated by U.S. Customs and Treasury Department requirements that imported goods be marked with their country of origin (i.e. “Made in Brazil”). When an imported product incorporates materials and/or processing from more than one country, Customs considers the country of origin to be the last country in which a “substantial transformation” took place, meaning that a manufacturing process resulting in a new and different product with a new name, character and use that is different from what existed before. Customs will make a country-of-origin determination using the “substantial transformation” test on a case-by-case process. Even if Customs determines that an imported product does not need a foreign country-of-origin mark, it is not necessarily permissible to promote that product as “Made in the USA” because the FTC considers additional factors to decide whether a product can be advertised or labeled as Made in USA.

Manufacturers and marketers should check first with Customs to see if they need to mark their products with foreign country of origin; if they do not, then they should look at the FTC’s standard to see if they can properly make a Made in USA claim.

For more information please contact Justine Moreau at 410-583-2400 or moreau@bowie-jensen.com.

icon-location

210 W. Pennsylvania Avenue, Suite 400
Towson, Maryland 21204