FTC Tames Lions Claiming ‘Made in USA’ | Kelley Drye & Warren LLP
Lions Not Sheep is an apparel company that, in its own words, empowers consumers who wear its clothing to “show people that it’s possible to live life like a LION, not like a sheep.” In addition to making people aware of this possibility, the company clearly advertises that its products are “Made in USA”, “Made in America”, “100% AMERICAN MADE” and – to better understand – the “BEST MANUFACTURING EQUIPMENT AMERICAN ON THE PLANET.”
The FTC disagreed with the US-origin claims (but remained largely silent on the possibility of living like a lion). According to its complaint, the company took garments made in another country, removed country-of-origin tags, and printed “Made in USA” on the items. The FTC alleged that in most cases, goods advertised as “Made in the USA” were imported entirely with limited finishing work done in the United States.
Whether or not a product is made in the USA isn’t usually obvious, so when these cases come out, many of us wonder what caught the FTC’s attention. In this case, it’s less of a mystery. In 2020, the company owner posted a video on social media explaining that to make “Made in the USA” claims, marketers must prove that products are “all or nearly all” made in the USA . So far, so good. He then explained that he could hide the fact that the shirts are made in China by ripping out those labels and replacing them with other labels. It’s no longer good.
To settle the case, the company and its owner agreed to pay $211,335 and to change their marketing practices. For example, they cannot make “Made in USA” claims unless:
- Final assembly or processing of a product takes place in the United States, all significant processing that goes into the product takes place in the United States, and all or substantially all of the ingredients or components of the product are manufactured in and sourced from United States ; or
- A clear and visible qualification appears immediately next to the representation which indicates precisely the extent to which the product contains foreign parts, ingredients or components and/or processing; or
- For a claim that a product is assembled in the United States, the product is last substantially transformed in the United States, primary assembly of the product occurs in the United States, and assembly operations in the United States States are substantial.
This case demonstrates that the FTC continues to take “Made in USA” claims seriously. If you are making national origin claims, be sure to take a close look at the FTC’s new Made in USA labeling rule and assess how well you are complying with it. This case also demonstrates that you shouldn’t post videos showing how to break the law. If you do this, you might want to be a little more sheepish (and less lion-like) about your practices.