The Winter Olympics are here. I just watched the women’s U.S. hockey team take on Team Canada and it got me wonderin’: are those sweaters “Made in the USA”? To my knowledge, Nike does not tout them as such, and in fact, Nike has not revealed where its U.S. Olympic team apparel is made.
You may recall Ralph Lauren – the official outfitter of these Olympic Games – came under fire at the 2012 London Games when it was revealed that its Olympic clothing was made in China. But since then, the Polo Olympic gear is Born in the Garden State.
This leads to a perfect opportunity to provide a basic primer (or a refresher) of the F.T.C. rules on advertising a product as “Made in the USA.” Surveys of Americans have found that about 70% prefer products labeled “Made in the USA” and at least that many said they’d pay up to 20% more for these US-based products. The reasons cited include the belief that American-made products are better, that it helps keep US jobs, and that it subsidizes poor working conditions in some foreign countries. But most products do not need to identify their country of origin, so the only way to give the people what they want is to tell the people what they want to hear. To do so, you need to follow the F.T.C.’s Enforcement Policy Statement on U.S. Origin Claims.
What is an Unqualified Claim?
An unqualified claim is anytime you expressly or implicitly give the “net impression” of communicating that your product is of U.S. origin.
What Are Types of Unqualified Claims?
These include U.S.-origin labels or advertising statements, without restriction, such as “made in”, “manufactured”, “built”, “produced”, “created”, or “crafted” in the USA. And it could also include when your ad has, without restriction, a US flag, a US map or reference to a US office or factory.
What Are the Requirements to Make an Unqualified Claim?
- Final assembly or processing of the end product is in the US;
- All significant parts and processing that go into the end product is the US; and
- All or virtually all components of the end product are made and sourced in the US.
What Factors Will the FTC Look At?
- Does the end product contain only a de minimus or negligible amount of foreign content?
- How far removed is the foreign content from the end product?
- What portion of the manufacturing costs are attributable to US parts and processing?
- How important is the foreign content to the form or function of the end product?
What Doesn’t the FTC Look At?
- There is no minimum percentage test for content or costs.
- It does not matter if the parts cannot be obtained in the US.
- Substantial transformation of the product in the US is not sufficient.
- There is no good faith exception.
What is a Qualified Claim?
Ads for US-based products that cannot meet the Made in the USA standard must be qualified with a disclaimer immediately adjacent to the claim.
What are Examples of Qualified Claims?
- Made in the USA of domestic and imported parts.
- Manufactured in the USA with foreign materials.
- 60% US content.
- Made in US with imported leather.
- Assembled in the US (as long as it’s where the product undergoes its principal assembly).
- Designed in the US.
What Are the Penalties for Making an Unsubstantiated Claim?
- Monetary – up to $43,280 for first time violations.
- Cease and Desist Order.
- Corrective advertising.
- And the FTC may bring claims directly against a company’s officers personally.
The ultimate determination of whether a brand can advertise that its product(s) are Made in the USA is very fact-specific. The pro-US sentiment typically associated with the Olympics is an ideal time to consider whether your brand can wrap itself in the red, white, and blue (even when the only true US-origin red sported by Hillary Knight comes from a hard check to the boards).
Please contact Robert Laplaca to answer any questions or provide additional information about this post.
