Locke Lord QuickStudy: Once Again, the FTC Shows How Serious It Takes False Made in USA Claims With Its $3.7M Fine

Locke Lord LLP
May 2, 2024

Last Friday the FTC business blog reported the largest civil penalty received in a case involving the ‎FTC’s Made in USA labeling rule. In 2022, Williams-Sonoma, Inc., entered into an administrative ‎order with the Federal Trade Commission to settle previous violations of the FTC Made in ‎USA labeling rule. On entering into the FTC Administrative Order, Williams-Sonoma, Inc., paid ‎‎$1,000,000 in civil penalties. Despite very clear provisions in the FTC 2022 Administrative Order, Williams-Sonoma, Inc., continued to make Made in the USA Claims that were in violation of the ‎Administrative Order and the underlying Made in USA labeling rules.‎

Because violation of an administrative order constitutes a violation of the law, the Commission ‎referred the matter to the Justice Department who commenced civil action against Williams-Sonoma, Inc. To settle the matter, Williams-Sonoma, Inc., accepted all the allegations of the justice’s ‎complaint as correct. To settle the suit with the Justice Department, Williams-Sonoma, Inc., agreed to ‎comply with the terms of the 2022 Administrative Order and to pay civil penalties of $3.7 million.‎

The FTC views these matters as not being just a matter of consumer deception but importantly being a ‎matter that unfairly impacts honest competitors.‎

The last major FTC civil penalty levied by the agency for false Made in USA Claims was against ‎a tractor manufacturer for falsely labeling replacement parts as Made ‎in USA, which resulted in a $2 million civil penalty.

Special Note for manufacturers and marketers of OTC drug products: The FTC has taken the position that the active ingredient in an OTC drug product is the product, which means if it was imported the product cannot make a Made in USA claim. The FTC could extend the logic applied to the active ingredients in OTC products to other products where a critical component is not made in the USA.