FTC Crackdown Continues - No Free Pass for False “Made in USA” Claims

An Order to Obey the Order

FTC staff identified several products that violated the 2020 Order, as they were either wholly imported or contained significant imported content while displaying “Made in USA” claims. Even worse for the brand, many of those same products were identified in Williams-Sonoma’s compliance reports as compliant with the Order. In the complaint, the FTC alleged that between April 2022 and August 2023, Williams-Sonoma advertised certain PB Teen mattress pads as “Crafted in America from domestic and imported materials,” when those mattress pads were wholly imported from China.

These misleading advertisements and violations of the 2020 Order by Williams-Sonoma have cost the company a record-breaking $3.17 million dollars. In the penalty announcement, FTC Chair Lina M. Khan said, “Williams-Sonoma’s deception misled consumers and harmed honest American businesses. Today’s record-setting civil penalty makes clear that firms committing Made-in-USA fraud will not get a free pass.”

In addition to the civil penalty, the settlement reinforces the demands of the 2020 FTC Order by requiring Williams-Sonoma to submit annual compliance certifications and limiting the kinds of claims the company can make. The following three requirements provide helpful restatements of the FTC’s guideposts for all companies making “Made in USA” claims:

• Restriction on Unqualified Claims: Williams-Sonoma is barred from displaying unqualified “Made in USA” claims for any product, unless it can show that the product’s final assembly or processing — and 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.
• Requirement for Qualified Claims: Williams-Sonoma is required to include a clear and conspicuous disclosure about the extent to which any “Made in USA” product contains foreign parts, ingredients or components, or processing.
• Requirement for Assembly Claims: Williams-Sonoma must be sure that any product marketed as “Made in the USA” was last substantially transformed in the United States, its principal assembly took place in the United States, and US assembly operations were substantial.

Takeaway

To avoid landing on the wrong side of an FTC enforcement action, it is critical that companies pay close attention to the Made in USA Labeling Rule. When in doubt, err on the side of not advertising your products as “Made in USA,” or at a minimum give consideration to making a qualified as opposed to an unqualified US-origin claim. Advertising counsel’s review is a useful tool in assuring compliance with FTC advertising guidelines.

Our team will be monitoring current and future FTC enforcement actions as they arise. Please feel free to contact your ArentFox Schiff LLP attorney or an author with any questions or concerns.