Markets Wired

Following public comment periods, the Federal Trade Commission has approved final consent orders in two cases in which the agency alleged that companies falsely claimed their products were made in the United States.

Patriot Puck: First announced in September 2018, the FTC’s complaint against four related Farmingdale, New York-based companies doing business as Patriot Puck alleged that the companies made false claims that their hockey pucks were all or virtually all made in the United States. According to the complaint, which names George Statler III as an officer of all the companies, Patriot Puck’s claims in its advertising, packaging, and promotional materials included “Made in America,” “Proudly Made in the USA,” “100% American Made!” and “The only American Made Hockey Puck!”

Sandpiper, PiperGear: First announced in September 2018, the FTC’s complaint against California companies Sandpiper of California, Inc. and PiperGear USA, Inc. alleged that the companies claimed in advertisements, product labels, and promotional materials, and on company websites and social media, that their backpacks, travel bags, wallets, and other products were all or virtually all made in the United States.

But according to the complaint, more than 95 percent of Sandpiper’s products were imported as finished goods, and approximately 80 percent of PiperGear’s products either were imported as finished goods, or contained significant imported components. And in some wallets imported as finished goods, the companies hid truthful country-of-origin information on the back of tags, and inserted cards that prominently displayed false U.S.-origin claims, the complaint alleged.

Under the terms of the final orders, Statler and the four Patriot Puck companies, as well as Sandpiper and PiperGear, are prohibited from making unqualified U.S.-origin claims for their products, unless they can show that the products’ 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.

Under the orders, any qualified Made in USA claim must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, and/or processing. To claim that a product is assembled in the United States, the respondents in both cases must ensure that it is last substantially transformed in the United States, its principal assembly takes place in the United States, and United States assembly operations are substantial.

The orders also prohibit the respondents from making untrue, misleading, or unsubstantiated country-of-origin claims in their marketing materials about any product or service.

The Commission has an Enforcement Policy Statement on U.S. Origin Claims, and other business guidance on how companies can comply with the “Made in the USA” standard. The FTC’s Made in the USA page features cases, instructive closing letters, and the brochure Complying with the Made in USA Standard, which answers many of the questions companies ask.

The Commission voted 3-2 to approve the final orders in both of these cases. Chairman Joseph J. Simons issued a concurring statement. Commissioners Rohit Chopra and Rebecca Kelly Slaughter voted no. Commissioner Chopra issued a dissenting statement on Patriot Puck, and another on Sandpiper, PiperGear. Commissioner Slaughter issued a dissenting statement. (FTC File Nos. 182 3113 (Patriot Puck) and 182 3095 (Sandpiper, PiperGear)); the staff contact is Julia Solomon Ensor, Bureau of Consumer Protection, 202-326-2377.)