Against the backdrop of the U.S.-China trade war, government regulators are considering strengthening rules related to false “Made in the USA” marketing claims, which some consumer advocates say lack teeth.
According to Federal Trade Commission policy dating back to 1997, when products make a “Made in the USA" claim, the marketer “should have a reasonable basis for asserting that ‘all or virtually all’ of the product is, in fact, made in the United States.” However, the policy is not considered a federal regulation, but merely offers guidance. Critics say that is not enough.
Truth in Advertising, a nonprofit that tracks misleading marketing, recently petitioned the FTC to strengthen its enforcement.
“Without a formal rule in place, the commission cannot seek civil penalties for a first-time offense,” states the petition, which was filed in late August. “As a result, even if an abuser of the FTC’s ‘Made in the USA’ guidance is caught, it typically gets a free pass, regardless of how egregious the violation may be.” It continued: “Marketers know they can reap the benefits of deceptively marketing products as ‘Made in the USA’ and face only the prospect of a slap on the wrist if they are caught.”
On the latest edition of Ad Age’s Marketer’s Brief podcast, ad lawyer Jeff Greenbaum, managing partner at Frankfurt Kurnit Klein & Selz, discusses the new movement to increase the FTC’s powers. He and other legal observers will closely watch a workshop the agency scheduled on Sept. 26 to discuss their oversight of “Made in USA” claims. “They are going to ask some very, very big questions about whether it’s working,” Greenbaum says.
“The problem is there is no bright-line test,” for the claim, he adds. “Nowhere has the FTC said that means that 95 percent has to be made here, or that certain things have to have happened here in order for it to be made here, other than the fact that we know no matter what, the final assembly or processing has to have happened here.”
Companies, he says, “need more guidance about ways they can safely talk about their presence in the U.S. without crossing the line.”
The new debate “is no doubt a result of the attention in America right now about these trade issues and about how important it has become to a segment of consumers to buy a product that is, in fact, made the United States,” he says.
On the podcast, Greenbaum also gets into some other legal issues, like what consumer protection authorities are monitoring during the deal-ridden back-to-school shopping season.