Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate the legal risk of campaigns and promotions.
Many customers like to “buy American” and perhaps are willing to pay more to do so. However, if you want to call out the red, white, and blue attributes of your product, you should know that the FTC, as well as some states such as California, have created very specific guidance and laws on what it means for a good to be of domestic origin. Under FTC guidance, final assembly must take place in the United States, and “all or virtually all” of the good must be attributable to U.S. sources. The FTC also considers a claim of Manufactured in the USA or Crafted in the USA to be the same as a Made in USA claim.
If some part of the product development occurs in the United States, depending upon the degree of U.S. manufacturing and sourcing, you may be able to use qualified Made in USA claims, such as Made in the USA from domestic and imported parts, Assembled in the USA, or Designed in the USA.
The FTC has issued a rule on Made in USA claims made on product labels that codifies much of the FTC’s prior guidance. The FTC appears to be interpreting broadly what constitutes a label under the rule, especially for online sales. The FTC will be able to seek civil penalties of up to $50,120 per violation of the Rule.
Before getting patriotic with your claims, consider the following:
- Analyze your cost of goods sold to make sure manufacturing takes place in the United States and a significant majority of the components or ingredients are also from the United States
- Look back and ask your suppliers where the inputs originated. It is not sufficient to buy a part from a U.S. company and assume that the part is American made
- If your product must be labeled as made in a foreign country under U.S. customs laws, you cannot make a Made in USA claim
- Featuring a flag or an eagle could be understood as making a Made in USA claim
- If you market in California, analyze your claim for compliance with California’s Made in USA law, which has U.S. wholesale value thresholds of 90% or 95%, depending upon certain factors
