Podcast - The FTC Takes Action Against Old Southern Brass for False "Made in the USA" Claims
In this episode of his "Clearly Conspicuous" podcast series, "The FTC Takes Action Against Old Southern Brass for False 'Made in the USA' Claims," consumer protection attorney Anthony DiResta examines Federal Trade Commission (FTC) enforcement efforts regarding "Made in the USA" claims. The FTC recently took action against Old Southern Brass for falsely claiming its products were made in the United States, the company was veteran-operated and proceeds of sales were donated to military-focused charities. Mr. DiResta dives into the FTC's proposed order that prohibits the company from making deceptive claims, requires a $150,000 payment and outlines strict guidelines for future "Made in USA" claims. He highlights the FTC's current focus on "Made in USA" marketing, emphasizing the importance for companies to adhere closely to FTC guidelines when making such assertions.
Good day and welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goal in these podcasts is to make you succeed in this current environment that's very aggressive and progressive, make you aware of what's going on with both the federal and state consumer protection agencies, and to give you practical tips for success. It's a privilege to be with you today.
FTC Complaint Against Old Southern Brass for "Made in the USA" Claims
Today we discuss yet another FTC action concerning "Made in the USA." The FTC — Federal Trade Commission — is taking action against EXOTOUSA, doing business as Old Southern Brass, for falsely claiming that certain company products were manufactured in the U.S. and that the company was veteran operated and donated 10 percent of its sales to military service charities. The FTC's proposed order would stop the company and its owner from making these deceptive claims and require them to pay a monetary judgment. The director of the FTC's Bureau of Consumer Protection said, "This company and its owner's brazen deception cheated consumers who wanted to support U.S. manufacturing, veteran-operated businesses and veteran charities. We will continue to hold accountable those who profit from false Made in the USA and military association claims." According to the FTC complaint, Old Southern made many claims on its website and in its advertising that the products it sold were made in the United States, including one post featuring "'Merica Gifts for the 'Merica Man in Your Life" that said, "All of our products are 100% American made. And nothing says America like making products right here at home for the American men and women alike." The complaint charges that in spite of such claims, many of the company's products were wholly imported from China or contained significant imported content. In addition, the complaint points to numerous instances where Old Southern claimed affiliation with the U.S. military, including that the company was veteran operated, donated 10 percent of sales to military service charities and that it sold products that included bullets or casings used by the U.S. military. One post on the company's website said, "As a veteran-operated business in the United States, our mission is to give back to fellow American patriots who have served and protected our country." Despite the company's claims, the company was not operated by veterans, and the products it sold as being used by the U.S. military were not actually used by the U.S. military. The complaint also charged that the company did not donate 10 percent of sales to veterans' charities as claimed. In fact, the company claimed charitable deductions that amounted to less than one half of 1 percent of sales.
FTC's Proposed Order
The FTC's proposed order against the company and its owner, which they have agreed to, prohibits them from making any false or misleading claims, including any about affiliation with or support of the U.S. military or veterans. It requires that $150,000 must be turned over to the FTC. The order also includes a number of requirements about the claims they made about the origin of their products:
- Restriction on unqualified claims. The company and its owner will be prohibited from making unqualified U.S. origin claims for any product unless they can show that the product's final assembly or processing, and all significant processing, takes place in the United States and that all or virtually all of its ingredients or components of the products are made or sourced in the U.S.
- Requirements for qualified claims. The company and its owner are required to include in any qualified "Made in the USA" claims a clear and conspicuous disclosure about the extent to which a product contains foreign parts, ingredients or components, or processing.
- Requirements for assembly claims. The company and its owner must ensure, when claiming a product is assembled in the U.S., that it was substantially transformed in the U.S., its principal assembly takes place in the U.S. and U.S. assembly operations are indeed substantial.
The order includes a monetary judgment of $4,572,000, which is partially suspended due to the defendant's inability to pay the full amount. Yet the commission finds that defendants lied about their financial status. The full amount of the judgment could become immediately payable. The FTC will publish a description of the consent agreement package in the Federal Register very soon. The agreement will be subject for public comment, after which the commission will decide whether to make the proposed consent or the final instructions for filing comments appear in the published notice on regulations.gov.
Concluding Thoughts
So here's the key takeaway. Claims of "Made in the USA" are on the front burner of the FTC's interest right now. If you make such claims, pay very close attention to the rules of the road as announced by the FTC. So please stay tuned to further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.