The FTC Increases Scrutiny of Made in USA Claims

Over the past few years, the Federal Trade Commission (FTC) has dramatically intensified its scrutiny of companies’ claims, on labelling and in advertising, that their products are “Made in the USA.” The FTC has launched numerous investigations to uncover potentially deceptive trade practices, asserting that untruthful claims impede businesses, mislead customers, and burden small business owners. The FTC roots its authority to do so in two ways: (1) the Made in USA Labeling Rule, promulgated in 2021 pursuant to authority established by statute (15 U.S.C. 45a, prohibiting unfair or deceptive acts or practices relating to Made in USA labeling); and (2) the FTC’s 1997 Enforcement Policy Statement on U.S. Origin Claims.

The MUSA Rule codifies longstanding FTC guidance, consistent with the FTC’s prior rulings and consumer perception surveys, prohibiting marketers from including unqualified U.S.-origin claims on labels unless: (1) final assembly or processing of the product occurs in the United States; (2) all significant processing for the product occurs in the United States; and (3) all or virtually all of the product’s ingredients or components are made and sourced in the United States. While remedies for Made in USA claims existed prior, the 2021 FTC regulation allows for substantially more enforcement against violators, including civil penalties. Since promulgation, the FTC has ramped up enforcement, as evidenced by numerous recent enforcement actions and investigative inquiries.

According to an infographic issued by the FTC tracking Made in USA enforcement from 2021-2024, the agency has had 11 law enforcement actions resulting in over $15.7 million in monetary judgements. In one such notable case from April 2024, the FTC levied civil penalties against repeat offender Williams-Sonoma (which we reported about here). The record-setting penalty, $3.175 million, came after the FTC discovered that not only had Williams-Sonoma violated existing Made in USA standards in advertising its PBTeen mattress pads (and several other products) as “Crafted in America from domestic and imported materials” when they were in fact made in China, it also violated a 2020 order directing Williams-Sonoma to change its noncompliant Made in USA labelling practices.

Williams-Sonoma entered into a settlement with the FTC, with an enhanced court order solidifying the settlement agreement late last month. In addition to the hefty penalty, the FTC also implemented stringent procedures that Williams-Sonoma must follow, including mandatory reporting. Notably, FTC Commissioner Rebecca Kelly Slaughter issued a statement warning businesses that the agency is prepared to take even more aggressive action, including “notice to deceived consumers and individual liability for responsible executives.”

The Commissioner’s statement aligns with additional recent positions taken by the FTC staff. Beyond formal suits against retailers (which the FTC lists here), the agency has also endeavored to ensure compliance through a less formal route of investigation and review, culminating in publicly issued “closing letters” to companies whose past practices raise concerns. Such closing letters, like ones issued in April 2024 to Oak Hall Industries and Wilson Sport Goods, set forth the basis for the FTC staff’s concerns, explain the legal requirements for voluntarily marking a product as “Made in USA,” explain the steps the company has taken to come into compliance, and offer future FTC staff assistance. While these investigations are seemingly less burdensome, and less costly, than a formal lawsuit, each letter ends with the same warning: “This action should not be construed as a determination that there was no violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, the MUSA Labeling Rule, or the Textile Act. The Commission reserves the right to take such further action as the public interest may require.”

Whether subject to a lawsuit or an investigation, businesses should consider the following steps to ensure compliance with Made in USA standards.

Protecting Your Business

• Learn the factors the FTC considers for Made in USA claims.
• Establish your substantiation (i.e., clear proof) before making U.S.-origin claims for your products.
• Consider consulting an attorney with compliance questions.
• If found to have committed a violation, whether through a formal lawsuit or through an investigative letter, ensure compliance with the recommended courses of action to avoid repeat violations.

Phyllis H. Marcus is head of Hunton Andrews Kurth's advertising compliance team and a partner in the firm’s Antitrust and Consumer Protection group in the firm’s Washington, D.C. office.

Katherine Pauly is an associate in the firm’s Antitrust and Consumer Protection group in the firm’s Washington, D.C. office.