If you have shopped online lately, odds are you saw products proudly advertising themselves as “Made in the USA.” Maybe it was a flag, a pair of boots, or a kitchen gadget. But how often is that label actually true? According to the Federal Trade Commission (FTC), not often enough. And this summer, the FTC delivered a not-so-subtle message to major players in American e-commerce, raising questions about the appropriate roles and responsibilities of platforms versus individual sellers.
What Happened? The FTC Puts E-Commerce Industry Leaders on Notice
Earlier this month, the FTC sent formal warning letters to multiple major e-commerce platforms, including Walmart, calling out the companies for allowing imported goods to be sold on their platforms with misleading “Made in the USA” (MUSA) labels. The letters included direct links to specific product listings the FTC deemed problematic. While the agency clearly expects platforms to monitor their marketplaces more closely, this raises complex questions about the feasibility and cost of policing millions of third-party listings and whether such responsibility should fall to platforms or individual sellers.
The FTC’s warning letters reflect the stricter enforcement of MUSA labeling when compared to typical labeling requirements. MUSA regulations, promulgated under the authority of a separate statute from the FTC’s general label requirements, have broader implications for manufacturers as MUSA regulations apply to both a product’s label and online or mailed promotional materials.
Congress enacted its first iteration of MUSA regulations in 1994 through the Violent Crime Control and Law Enforcement Act of 1994 (the “Crime Bill”) in a “Labels on Products” section that was later codified as 15 USCA Section 45(a).1 15 USCA 45(a) regulates products with “Made in the USA labels” but does not statutorily define “labels.” When the FTC promulgated the MUSA labeling rule in 2021, it did so under the authority of 15 USCA 45(a) and utilized the statute’s undefined “labels” language to draft a rule that applies to both labels and certain promotional materials. Specifically, online or mail promotional materials must also comply with MUSA labeling requirements. See 16 C.F.R. § 323.1; 16 C.F.R. § 323.3.
In comparison, the FTC’s requirements for consumer labels are generally promulgated under the authority of the Fair Packaging and Labeling Act (FPLA). Unlike 15 USCA 45(a), the FPLA statutorily defines labels as “any written, printed, or graphic matter affixed to any consumer commodity or affixed to or appearing upon a package containing any consumer commodity” and restricts the FTC’s enforcement to a product’s label or packaging. See 15 USCA § 1459.
These distinctions in regulatory scope and authority raise important questions about practical implications for businesses operating in today’s marketplace. The “Made in the USA” label is not just a marketing slogan. For many consumers, it is a sign of quality, safety, and a commitment to supporting American jobs. U.S. law holds domestic manufacturers to high standards for product safety, environmental impact, and workplace conditions. The FTC’s warning letters remind manufacturers of the agency’s interpretation of MUSA standards. However, some industry observers question whether the FTC’s broad enforcement approach creates unreasonable compliance burdens for businesses, especially smaller sellers and platforms.
The Rise (and Risk) of MUSA Knock-Offs
Of course, there is a powerful appeal to buying American. But that appeal has led some manufacturers and sellers to get creative (sometimes too creative) with their labeling. The result? A marketplace with products that look and sound like they are American-made but are actually imported, sometimes with only minimal finishing touches done stateside.
The implications of this issue are multifaceted. Proponents of strict enforcement argue that mislabeling undermines consumer trust and disadvantages compliant American manufacturers. Critics, however, contend that the current standards may be overly rigid, failing to recognize the global nature of modern supply chains. What’s undeniable is that sellers and platforms face potential legal exposure regardless of their position in this debate.
The Legal Standard: What Does “Made in the USA” Actually Mean?
The FTC’s “Made in the USA” Labeling Rule, which took effect in 2021 (16 C.F.R. § 323), lays out the requirements in plain language:
- All or virtually all of the product’s components must be made or sourced in the United States;
- All significant processing must occur in the United States; and
- The product’s final assembly or processing must take place in the United States.
In other words, you cannot just bolt on a handle or slap on a sticker in California and call it a day. If a product contains significant foreign content or is primarily assembled overseas, it does not qualify.
To help businesses get this right, the FTC updated its guidance in 2024 with the “Complying with the Made in USA Standard“ business guide. This resource offers examples of what does, and does not, count as compliant labeling.
The FTC’s Enforcement Push: Why Now?
Despite these standards, the FTC continues to find imported products masquerading as American-made. The problem is especially rampant on large online marketplaces, where third-party sellers can upload new products in seconds and reach millions of buyers.
The FTC’s recent letters to industry leaders are more than just a warning—they are a shot across the bow for the entire e-commerce industry. The agency’s letters included hyperlinks to live listings, making it easy to see the problem in action: foreign sellers touting “100% USA Made” boots, American flags, and even kitchen utensils, all while shipping from overseas or listing “imported” in the fine print.
Whether you’re a seller or a platform hosting sellers, the FTC’s actions merit attention. The agency appears to be signaling increased enforcement priorities in this area.
Why Should Lawyers and Businesses Care?
For lawyers advising retailers, manufacturers, or third-party sellers, this is a compliance issue that cannot be ignored. The FTC has the authority to impose hefty penalties for deceptive labeling, and state attorneys general can pile on with their own enforcement actions. Even a single complaint can lead to investigations, negative press, and class action lawsuits.
For businesses, the risks are real:
- Legal consequences: Violating the MUSA Labeling Rule is considered an unfair or deceptive act under the FTC Act, with civil penalties up to tens of thousands of dollars per violation.
- Reputation damage: Getting called out for “fake American” products is a PR nightmare.
- Marketplace bans: Online marketplaces can (and do) suspend sellers who violate labeling rules.
What Should Sellers (and Their Lawyers) Do Now?
If you are selling products online, now is the time for a compliance check. Here is what we recommend:
- Audit Your Labels: Review every product labeled as “Made in the USA.” Can you back up the claim with documentation?
- Check Your Supply Chain: Ensure that all or virtually all components and processing are U.S.-based if you are making a MUSA claim.
- Train Your Team: Make sure your marketing, compliance, and legal teams are on the same page about what qualifies.
- Monitor Third-Party Sellers: If you run a platform, implement systems to catch and correct false and/or misleading labeling before the FTC does it for you.
- Stay Updated: The FTC’s business guides are a must-read, and enforcement priorities can, and do, change.
The Bottom Line
The FTC has clarified its expectations regarding “Made in the USA” claims. The agency is holding both sellers and platforms accountable. So whether you are a manufacturer, a retailer, a third-party seller, or legal counsel to any of the above, now is the time to double-check your compliance. If you have questions about the MUSA Labeling Rule or need help navigating FTC compliance and determining the approach that best serves your business interests, our team is here to help.
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