Advertisements for “Made in USA” products are proliferating on social media. Brands are using social media to tap into the emotional need to support the domestic economy with goods that are “Made in America.” Last month, Martha Stewart’s company took to social media to promote its “American Made” awards, spotlighting the “next generation of great American Makers.”
Darn Tough Vermont, a sock company, has adopted a pervasive social media marketing strategy, promoting its “Made in USA” label as a selling point. But what are the legal implications of claiming your product is American made? Brands creating social media campaigns that tout their products as American made should be conversant with the FTC’s “Made in America” standard, particularly since the agency announced new enforcement of its policy just last month. (For a concise Q&A about the FTC’s standard, click here.)
The FTC has ruled consistently that consumers prefer to buy products at home here in America. Furthermore, consumers expect “Made in USA” or any derivative claims (e.g. “American made”; “Made in America” or use of American flag) to mean that a product is virtually entirely American made. 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.”
Since reasserting its standards in 1997, the FTC has 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.
In October, 2013, the FTC announced a settlement with E.K. Ekcessories in Utah, an outdoor accessories manufacturer, for its advertisements that include a “Made in the USA” claim and a photo of the American flag hugged by the words “Truly Made in the USA.” The FTC asserted that these claims are false and misleading because the company imports many of its products and component parts. The FTC’s press release explains, “According to the Commission’s 1997 U.S. Origin Claims Enforcement Policy Statement, for a product to be advertised or labeled as “Made in the U.S.A,” the product must be “all or virtually all” made in the United States – that is, all significant parts and processing must be of U.S. origin, and the product should contain no (or negligible) foreign content.”
The consent order obligates the company to notify its distributors of the settlement and ask them to stop using marketing materials containing the claim. The distributors even had to cover up claims of this sort on already printed packaging materials with stickers. This last measure is unusual for the FTC because the products are already in the distribution chain.
In another case last month, the National Advertising Division (“NAD”) of the Better Business Bureau enforced the FTC’s standards on qualifiers. The FTC policy statement explains that U.S. origin claims may be qualified to avoid consumer deception. 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.” Assuming such qualifications are prominent, clear, truthful, and capable of substantiation, the FTC will accept them regardless of form.
The NAD commented on the concept of prominence while investigating STIHL Incorporated’s “Built in America” claim in national advertising. STIHL had qualified its claim with a footnote that declared, “A majority of STIHL Products are built in the United States from domestic and foreign components.” While the NAD found that the qualifier sufficient to explain the claim, it took issue with its disclosure in “mice type.” The NAD recommended “making [the claim] substantially larger and placing it in close proximity to the triggering claim.” (For a more detailed discussion of what clear and conspicuous and prominent mean in advertising online, click here.)
With two cases enforcing the FTC’s policies on “Made in USA” just last month, now is the time for brands to become aware of the requisite standards when promoting products are American made in social media.