FTC action on ‘Made in USA’ claims signals heightened risk for industry, attorney says
The final action, announced by the US Federal Trade Commission last week, was taken against Chemence, Inc., a maker of fast acting superglues sold under store brand names. The initial settlement was announced in late 2020 and calls for the company and its principal, James Cooke, to pay a $1.2 million fine. The hefty fine came as a result of the firm having violated a previous order dating back to 2018 and Cooke having allegedly perjured himself in 2017 by claiming to have changed the claims to include clarification that the materials in the products were imported.
Percentages of foreign materials bears on claim
Chemence allegedly continued to claim without qualification that its glues were ‘Made in the USA.’ But FTC alleges that imported materials accounted for more than 80% of the materials costs and more than 50% of the overall manufacturing costs for these products.
Attorney Ivan Wasserman, a partner in the firm Amin Talati Wasserman, said the case could have implications for the dietary supplement industry.
A significant amount of dietary supplements are sold with Made in USA either on the labels or prominently displayed in the online marketing materials. These claims appear on turmeric and vitamin D supplements, to pluck just two examples out of the hat, even though in both cases the main ingredients almost certainly come from overseas. A lawsuit brought against Nature’s Way over its vitamin C supplements was a case in point. The company had been making an unqualified ‘Made in USA’ claim on the product even though it was using ‘Vitamin C (as ascorbic acid)’ in the product, which is manufactured in China.
Increase in class actions
Wasserman noted that the recent executive order by the Biden Administration ‘buy American’ when possible for government contracts will being the issue into sharper focus.
“In the last several years we saw a dramatic increase in the number of FTC actions against companies for making unqualified ‘Made in the USA’ claims that did not comply with their standards. Most of them had been in the form of FTC public Closing Letters, without any injunctive or monetary relief. Through public statements and executive orders, the Biden administration has been vocal about the importance it is putting on “Buy American,” and as a direct corollary to that the FTC will increase its enforcement against companies it believes are deceptively capitalizing on consumers’ desire to purchase American made goods,” Wasserman told NutraIngredients-USA.
“Dietary supplement companies must understand that ‘Made In USA’ claims are voluntary, marketing claims and will be treated as such by the FTC, the NAD, and Class Action attorneys as such. If all or virtually all of the ingredients in the product are not sourced from the USA, appropriate qualifiers must be used to ensure that consumers understand the actual American-ness of the product,” he added.
