Legal Requirements for Claiming Products “Made in America”

On Friday, January 6, 2011, The New York Times reported that manufacturing is experiencing an upswing in the United States. When can a manufacturer claim that its products are made in America? What does “Made in USA” mean from a legal perspective? This is a good time to review the FTC’s “Enforcement Policy U.S. Origin Claims” in advertising and packaging.

Why does the FTC care about claims that a product is “Made in America?”
The FTC has ruled consistently that consumers prefer to buy products at home here in America. Furthermore, consumers expect “Made in USA” to mean that a product is virtually entirely American made.

What constitutes a claim that a product is “Made in America”?
U.S. origin claims do not only take the form “Made in America” or “Made in USA.” Any labeling or advertising copy or use of the American flag, map, or other geographic references that conveys a net impression that the product originates from the United States would constitute a claim in need of substantiation. Advertisers considering making “Made in USA” type claims should be certain to review the FTC’s Policy Statement for a detailed explanation of these factors.

What is the FTC’s standard for US Origin Claims?
To prevent consumer confusion, the FTC’s policy requires substantiation for US origin claims based on an “all or virtually all” standard. If a product is merely assembled here, but uses imported goods, an American origin claim would be improper. If a manufacturer is advertising a product as made in America, it should only contain a “de minimis, or negligible, amount of foreign content.”

The FTC Policy Statement goes on to point out that while there is no “bright line” for determining when a product is “all or virtually all” American made, it will consider a series of factors on a case by case basis. A minimum threshold for all claims is whether the final assembly or processing of the product takes place here. The FTC will examine also such factors as the proportion of US manufacturing costs and the remoteness of the foreign content in relation to the creation of the finished product. This analysis also applies to comparative country of origin claims.

Can a manufacturer use qualified “Made in America” claims?
The Policy Statement also explains that U.S. origin claims may be qualified to avoid consumer deception. Assuming such qualifications are prominent, clear, truthful, and capable of substantiation, the FTC will accept them regardless of form. Examples given in the Policy Statement are: “Made in USA of U.S. and imported parts”, “60% U.S. content”, “Made in USA from imported leather”, or “Made in USA from French components.”

How does the FTC standard work with US Customs’ regulations?
In creating a proper qualification for its advertising and packaging, the manufacturer should first look to US Customs Service requirements for product labeling. The Customs Service looks to where the product was “last substantially transformed” in determining whether foreign indicia of origin is necessary.

The FTC Policy Statement points out that where Customs requires a label that a product is made in a foreign country, “it would be inappropriate, and confusing, to use a claim such as ‘Made in USA from U.S. and imported parts.’” In other words, the FTC will work hand in hand with Customs Service to be sure that labeling and advertising for a product have a logical relationship.

Has the FTC enforced its rules for claiming a product is “Made in America”?
Since reasserting its standards in 1997, the FTC steadily enforced its origin claims’ policy. Its settlements have affected a variety of industries, including consumer goods companies, component part manufacturers, cosmetics companies, and over-the-counter pharmaceuticals companies. The settlements have barred American origin claims, assessed monetary damages (e.g. $205,000 against The Stanley Works, a tool manufacturer), and required ongoing monitoring by the FTC.

For more information, see the FTC’s web page on the “Made in U.S.A. Standard.”