FTC Codifies 'Made in USA' Label Requirements

FRIDAY, JULY 30, 2021


Earlier this month, the U.S. Federal Trade Commission published a final rule regarding “Made in the USA” claims and labels. While the rule doesn’t impose and new mandates, it does codify its longstanding enforcement policy on origin claims.

By codifying the guidance, the FTC can now impose penalties for non-compliance. The rule applies to product labels and promotional materials associated with direct sales of a product, including electronic and written promotional materials.

The rule prohibits marketers from including unqualified “Made in USA” claims on labels and promotional materials unless:

  • 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.

The rule does allow for possible exemptions, where evidence shows that an unqualified Made in USA claim is not deceptive and/or complies with alternative requirements designed to prevent fraud.

What Does This Mean?

In terms of paints and coatings, the American Coatings Association had submitted comments on the proposal to codify the requirements back in September.

The FTC considers products with more than a de minimis amount of components manufactured outside the United States as violating its MUSA requirements and says that a marketer making an unqualified claim for its product should, at the time of the representation, have a reasonable basis for asserting that “all or virtually all” of the product is made in the United States.

The ACA objected to the vague interpretation of “virtually all” and asked for further guidance, possibly with percentage values.

The ACA noted that this is especially complicated for paint manufacturers in terms of the raw materials, which could have mixtures of foreign-produced components.

However, the FTC issued the final rule as is and slated the effective date for Aug. 13. To this, the ACA urged the delay of the effective date by one to three years so that paint companies could navigate what it means for them.

The FTC declined, though, because the rule was already in existence and it views it as clearly written.

   

Tagged categories: Container labels; Federal Trade Commission; Federal Trade Commission; Good Technical Practice; Government; NA; North America; Regulations

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