Retailers cannot say products are made in the USA when they are made elsewhere

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Gennex Media LLC, an online marketplace for customizable products, and its sole director and shareholder Akil Kurji, have agreed to an FTC consent decree resolving allegations that the company falsely claimed its Brandnex novelty products were “Made in the USA,” “Made in the USA,” and “Made Right Here in America!” while in many cases they were entirely imported from China. Gennex heavily promoted the national origin of its products on social media, saying they “support jobs in the United States.” In a unanimous decision, Gennex and its principal were ordered to pay $146,249.24 and had to stop claiming that its customizable promotional products, including wristbands, lanyards, temporary tattoos and buttons, are made in America.

This action is another example of the FTC’s emphasis on enforcement of “Made in USA” claims and follows our previous statement. historic $1.2 million settlement in a 2020 FTC “Made in USA” enforcement action. The Commission Order of Gennex provides specific guidance for retailers making unqualified and qualified “Made in USA” claims and “assembled in the USA” claims:

  1. Unqualified statements that products are made in the United States are permitted only when final assembly or processing or any substantial processing takes place in the United States or substantially all ingredients or components of the products are manufactured and sourced the United States.

  2. Qualified Made in USA claims are appropriate if the qualification is clear and conspicuous and “immediately adjacent” to the Made in USA claim and “precisely indicates the extent to which the product contains foreign parts, ingredients, components and/or a treatment”.

  3. “Assembled in the United States” claims are permitted when the product is “substantially ultimately processed”, primary assembly occurs in the United States, and assembly operations in the United States are “substantial “.

The FTC issued a “Made in USA” regulatory proposal notice in June 2020. Recent Commission regulations signal that false or misleading “Made in USA” claims are a priority for enforcement. This enforcement priority, coupled with impending rulemaking, advises retailers to remain vigilant when making “Made in USA” claims. Further information can be found on the FTC “Made in USA” guidelines here.

Copyright © 2022, Hunter Andrews Kurth LLP. All rights reserved.National Law Review, Volume XI, Number 67

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