- FTC Brings its Third "Made in America" Complaint in 12 Months
- March 1, 2018 | Authors: Sheila A. Millar; Nathan A. Cardon
- Law Firms: Keller and Heckman LLP - Washington Office; Keller and Heckman LLP - Washington Office
If you advertise your toppers as "made in the USA" but 70% of their materials come from overseas, you could wind up eating your hat. The Federal Trade Commission (FTC) made the Bollman Hat Company do just that for marketing its headgear with claims such as "American Made Matters," "Choose American," and "Made in USA since 1868," when in fact nearly three-quarters of their hats were imported, and the rest contained significant overseas content.
Bollman Hat Company sells hats both online and in stores under its name as well as familiar names such as Helen Kaminski, Jacaru, Kaminski XY, Kangol, and Karen Kane. The company makes private label headgear as well. According to the FTC's complaint, the Pennsylvania-based milliner and its wholly-owned subsidiary, SaveAnAmericanJob, LLC, didn't just make false claims concerning the origin of their products. As far back as 2010, they also created a U.S.-origin seal, "American Made Matters" (AMM), which they used to self-certify their products "to boost the credibility of 'Made in USA' claims." The seal implied that it was an independent third-party, and Bollman and SaveAnAmericanJob licensed it to any company that became an AMM member. All that took was paying an annual $99 licensing fee, and that at least 50% of the cost of a single product was incurred in the United States, with final assembly or transformation in the United States. This self-assessment was not analyzed or verified by any independent third-party.
Under its proposed settlement with the FTC, Bollman and SaveAnAmericanJob may not make any US-origin claims in their marketing materials unless:
The final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and all or virtually all ingredients or components of the product are made and sourced in the United States; or
A clear and conspicuous qualification appears immediately adjacent to the representation that accurately conveys the extent to which the product contains foreign parts, ingredients, or components; or processing.
Additionally, consistent with other enforcement actions involving environmental and similar claims that involve the advertiser's own "seal" (which we've written about), the proposed agreement prohibits Bollman and its subsidiary from using their certification standard unless: an independent third party objectively vets the certification, or they clearly and prominentlydisclose in the certification and in any other promotional materials that the certified products or services are made based on self-certification.
As we have previously reported, "Made in the USA" is a marketing lure for a wide variety of products, and this action - the third in the past 12 months - shows that the Commission continues to target firms that misleadingly promote products as American-made. Companies considering making home-grown claims should adhere to the FTC's Enforcement Policy Statement on U.S. Origin Claims and Endorsement Guides, which lay out specific guidance on the use of country-of-origin claims in marketing and advertising. If they can't play by those rules, it would be wise to put a cap on those "Made in America" promises.