Beware of Made in USA

Made in America signConsumers might notice on product labels or in marketing materials “Made in America” or “Made in USA”. This marking is simple enough…right? The product should be made in one of the 50 states. But what about the District of Columbia and U.S territories Puerto Rico, American Samoa, Guam, Northern Mariana Islands and U.S. Virgin Islands? What if the components are imported? What if a product was imagined in the U.S. but was made overseas? There can be some confusion.

To confuse consumers even more, effective January 1, 2016, California law will now allow companies to label their products as Made in USA even if foreign content is 10%. Talk about misleading!

– This section shall not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States, if all of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 5 percent of the final wholesale value of the manufactured product.

– This section shall not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States, if both of the following apply:
(A) The manufacturer of the merchandise shows that it can neither produce the article, unit, or part within the United States nor obtain the article, unit, or part of the merchandise from a domestic source.
(B) All of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 10 percent of the final wholesale value of the manufactured product.California Bill SB-633

Given that it was reported in a leading consumer research magazine that almost 8 in 10 Americans consumers say they would rather buy a product made in America than an imported one, there are unscrupulous companies that are more than willing to cheat the rules to pull on Americans’ heart strings.

Who Approves and Enforces “Made in America”

The Federal Trade Commission (FTC) is responsible for determination of deceptive claims with products labeled as “Made in USA”. Since the “Made in USA” labeling does not require manufacturers to register or prove claims to the FTC, they have created a guide book to provide businesses with definitions and examples.

Policing of the standard is left, in large part, to consumers who suspect noncompliance. How do consumers know the inner workings of a company? In reality, consumers have no way of knowing and so we all must hope whistle-blowers who work closely with companies do come forward. How many whistle-blowers come forward per year? The FTC does not publish that information and only publicizes large fraud cases against the federal government. In all likelihood, there are very few whistle-blowers that come forward.

In any case, if you are an individuals with suspicion of deceptive marketing practices, please contact:

  • Division of Enforcement, Bureau of Consumer Protection, FTC
  • State Attorney General’s office
  • Local Better Business Bureau
  • Business attorney

“Made in America” Definition

Any company can use “Made in America” or “Made in USA” if they meet the definition.

For most products, unless they are automobiles or items made from textile or wool, there is no law requiring manufacturers and marketers to make a “Made in USA” claim. But if a business chooses to make the claim, the FTC’s Made in USA standard applies. Made in USA means that “all or virtually all” the product has been made in America. That is, all significant parts, processing, and labor that go into the product must be of U.S. origin. Products should not contain any – or should contain only negligible – foreign content. FTC Complying with the Made in USA Standard

As a side note, even though there is a city in Japan called Usa, it never sent products to America claiming to be “Made in Usa”. US Customs require products coming into the US be marked by country of origin- not city. So any products made in Usa, Japan would be labeled “Made in Japan”.

Sub-types of Made in America claims

The FTC goes on to explain there are two types of claims- unqualified and qualified. These terms may be clear if you are an intellectual property attorney but to consumers it can be a bit counter-intuitive. Let’s try and explain.

Unqualified Claims

According to FTC lexicon, “unqualified” claims are those that meet the above definition that all (or virtually all) has been made in the USA. Unqualified does NOT indicate the product is not qualified to have the label- just the opposite. Unqualified claims are for only those products that are made with 100% American materials and 100% American labor.

Qualified Claims

Qualified claims indicate that the product is not entirely of American origin. The FTC further explains that qualified claims can be made as long as the amount or type of a product’s American content is described accurately. It might be easier to think “quantified” instead of “qualified”.

A qualified Made in USA claim is appropriate for products that include U.S. content or processing but don’t meet the criteria for making an unqualified Made in USA claim. Because even qualified claims may imply more domestic content than exists, manufacturers or marketers must exercise care when making these claims. That is, avoid qualified claims unless the product has a significant amount of U.S. content or U.S. processing. A qualified Made in USA claim, like an unqualified claim, must be truthful and substantiated.FTC Complying with the Made in USA Standard

Qualified claims cannot use “Made in USA” because it does not meet the “all or virtually all” standard. Qualified labeling such as “75% U.S. Content” or “Television assembled in USA from imported parts” are valid qualified claims as long as they are accurate and not misleading.

As for a misleading example- if a company designs a product in America, has it manufactured overseas and labels it as “Created in USA” it would be deceptive. This is because consumers could easily interpret “created” as “made”. Terms such as “produced,” “created” or “manufactured” are too general and should not be used to make any type of claim.

Ambiguous Claims

We have all seen claims like…

  • Rooted in America
  • American Craftsmanship
  • Built with American Pride

What do these claims mean? Is it that a company incorporated in America once upon a time? Is there an American making the products in some factory overseas? Unless an association or company can fully explain and backup the claim, it doesn’t mean much. Often these types of claims are simply marketing gimmicks to try and sway consumers who are really looking for Made in USA products.

Are Dapwood products “Made in America”?

With absolute certainty Dapwood Furniture can make an unqualified claim that all of our products are Made in America!

This is truthful and substantiated because:

  • Our premium hardwoods are from the Appalachian Mountain areas of the American East and South
  • The hardware is from the upper Midwest
  • We make everything in our shop in Albuquerque, New Mexico, USA