The Federal Trade Commission (FTC) continues to enforce its Made in USA Labeling Rule, which has been in effect since Aug. 13, 2021. In August 2022, McGuireWoods reported some lessons learned from one year under the labeling rule and outlined the FTC’s enforcement actions under the rule as of that date. Since that time, the FTC brought an action under the labeling rule against Electrowarmth Products LLC for falsely claiming that its heated fabric mattress pads were Made in USA after it had shifted production overseas.
At the same time, two new developments demonstrate increasing federal scrutiny of companies that market their products as Made in USA even where that marketing does not fall under the purview of the labeling rule. First, the FTC recently brought an enforcement action against the maker of Pyrex cooking and baking accessories for marketing its entire product line as Made in USA when certain products were made in China. This action was not a violation of the labeling rule because Pyrex properly marked the individual products as “Made in China,” but its general marketing as Made in USA nevertheless violated the FTC’s prohibition on false and misleading advertising. Second, the U.S. Department of Agriculture (USDA) announced a proposed rule narrowing the requirements for labeling meat, poultry and egg products as “Product of USA” or Made in USA.
Pyrex Enforcement Action
On March 7, 2023, the FTC finalized a decision and order against Instant Brands LLC, the maker of Pyrex-brand and other kitchen products, for violating Section 5 of the FTC Act. Section 5 prohibits false and misleading advertising; notably, the FTC did not allege that Instant Brands’ actions violated the labeling rule.
The FTC’s complaint outlines that Instant Brands made marketing claims stating or implying that all of its Pyrex glass products were of U.S. origin. Specifically, Instant Brands advertised Pyrex products as “Proudly Made in USA” and “American as Apple Pie,” among other statements. But beginning in March 2021, Instant Brands began producing some Pyrex three- and four-piece measuring cup sets in China, in response to increased demand resulting from the COVID-19 pandemic. The complaint describes how Instant Brands marked the measuring cups as “Made in China” but did not update its general marketing materials. Rather, it continued to state or imply that all Pyrex products were of U.S. origin. Instant Brands also did not update the descriptions displayed on an online retailer’s product pages for the China-produced products, which still advertised the measuring cups as Made in USA.
The FTC conducted an investigation and entered into a consent agreement with Instant Brands, which the FTC approved. The resulting order requires Instant Brands to (1) ensure the accuracy of all Made in USA claims it makes for its products; (2) make a monetary payment of $129,416; and (3) comply with certain compliance, recordkeeping and monitoring requirements.
USDA Proposed Rule
On March 6, 2023, the USDA announced a proposed rule amending the requirements to label meat, poultry and egg products as Product of USA or Made in USA (an “unqualified claim”).
Under the proposed rule, an unqualified claim can be used only if the product is “derived from animals born, raised, slaughtered, and processed in the United States.” If a product has ingredients in addition to the meat, poultry or egg (other than spices and flavorings), the additional ingredients also must be of U.S. origin to support an unqualified claim. Further, if the producer makes a “qualified claim,” (a claim that describes the extent, amount or type of a product’s domestic content or processing), it must accurately explain the steps conducted in the United States. While potential qualified claims may vary, one example from the proposed rule is “sliced and packaged in the United States using imported pork.”
The proposed rule would tighten current standards for labeling meat, poultry and egg products as “Product of USA” or Made in USA. Currently, any product imported and repackaged or reprocessed in a USDA Food Safety and Inspection Service facility can be labeled with an unqualified claim. USDA Secretary Tom Vilsack said the proposed rule seeks to address “a disconnect between what the consumers’ understandings and expectations are and what the label currently is.”
The proposed rule was long foreshadowed. President Joe Biden issued an Executive Order on Promoting Competition in the American Economy in July 2021, which McGuireWoods reported on in a previous alert. The order contained a directive to the Secretary of Agriculture to consider initiating a rulemaking to better define the proper U.S. origin labeling of meat products, among a number of other competition-related items. Further, the commentary to the FTC’s labeling rule included a note that regulation of country-of-origin labeling of agricultural products falls to the USDA and that the USDA planned to initiate rulemaking on the topic.
The FTC’s enforcement action against the makers of Pyrex and the USDA’s proposed rule on Product of USA labeling of meat, poultry and egg products demonstrate that federal enforcement of Made in USA marketing extends beyond the FTC’s labeling rule and brings up three main points for companies that market their products as Made in USA.
First, companies that make general statements or imply that their products are Made in USA, “American Made” or make similar statements must be careful that all of their products meet that standard. This is true even if production of one or more of the company’s products is temporarily moved overseas or if a significant component becomes unavailable in the United States and is imported. Proper compliance requires constant vigilance and may require significant changes to marketing material, including social media postings, if a company can no longer support an overarching Made in USA claim for its products.
Second, the FTC has the power to bring enforcement actions against companies for unsubstantiated Made in USA claims under Section 5 of the FTC Act even if the company is complying with the labeling rule. Prior to issuing the labeling rule, the FTC relied upon Section 5 for its Made in USA-related enforcement and that authority remains in addition to the labeling rule.
Third, the Biden administration is placing an emphasis on Made in USA labeling and marketing to consumers in all areas of the economy. Any company marketing its products as Made in USA or making a similar claim must ensure that it can substantiate those claims and must be aware of the potential consequences if claims cannot be supported.
Attorneys at McGuireWoods have extensive experience counseling and representing clients that market their products as Made in USA. Companies with questions about the FTC or USDA’s rules surrounding Made in USA marketing are encouraged to reach out to the authors of this alert.