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Made in the USA Labels: Information for Manufacturers, Retailers, and Consumers

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Made in the USA Labels: Information for Manufacturers, Retailers, and Consumers

By JamieD
Published: November 23, 2009 Updated: February 17, 2011

Attention all manufactures and retailers - do not advertise your products as "Made in the USA" if, in fact, they are not made in the United States. If half your product is made in the U.S while the other half is manufactured in China, you cannot claim it is "American-made." While it may seem appealing to stretch the meaning of "American-made," the Federal Trade Commission holds the power to enforce laws against businesses that make false or misleading claims about a product's U.S origin. To protect consumers, the Commission requires that all products advertised as American-made must be "all or virtually all" made in the U.S. Keep reading for more information on making sure your business is in compliance with the "all or virtually all" standard.
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The phrase "American-made" isn't just a patriotic statement - it's also an advertising claim that appeals to many U.S.
consumers by promoting the idea of stimulating the U.S. economy. Besides a few exceptions (country-of-origin and other laws), there is no law requiring products sold in the United States disclose information on U.S. made goods. However, if you choose to represent your product as American-made, you must comply with the FTC's Made in the USA policy.


Product advertisements fall into one of two categories:

  • Expressed advertisements (such as labels with "Made in the USA.", "Our Products are American-Made", "USA" claims) or

  • Implied advertisements ( give the overall impression that a product is of U.S. origin). Using U.S. symbols such as a flag, map, or geographic reference can be considered implied claims in certain circumstances.


Both expressed and implied advertisements are subject to FTC law enforcement.

Although the Commission does not pre-approve advertisements, manufactures and retailers, acting in truth and good faith do not need permission to make a claim. The FTC's Enforcement Policy Statement outlines what factors and  guidelines will be used to determine if a U.S. origin claim is misleading or deceptive.


Making a Claim


"Made in USA" claims describe the extent, amount, or type of a product's U.S. origin content.


Unqualified Claims are held to the "all or virtually all" standard. The "all or virtually all"standard requires that

      
  • All significant parts and processing are of U.S. origin and products contain no foreign content - even if the percent is negligible.  

The Commission considers several factors in determining if a product meets this standard:

  • A product's final assembly or processing must take place in the Untied States

  • The amount of a product's total manufacturing costs that can be attributed to U.S. parts and processing

  • How far removed any foreign content is from a finished product


When used in good faith, information from an American supplier can be used to verify domestic materials, but it is wise to request domestic percentages before advertising.


To make an unqualified claim, manufacturers or retailers should rely on a "reasonable basis" of competent and reliable evidence that supports their claim, including the cost of goods sold or inventory costs of finished goods. These costs generally include manufacturing materials, direct manufacturing labor, and manufacturing overhead. To account for the percentage of U.S. content, look back far enough to ensure a reasonable understanding that all foreign content has been accounted for in costs.


Tip: Consumers generally find foreign content incorporated early in the manufacturing process less significant than foreign content directly related to the finished product.

Qualified Claims indicate that a product is partially, rather than completely, American-made. Examples of such claims include "70% U.S. Content" and "Manufactured in USA. of U.S. and Imported Parts". These claims are appropriate for products that have a significant amount of U.S. content but do not meet the standard of an unqualified claim. Qualified claims are held to the same standards as unqualified claims. When making qualified claims, do not imply that more domestic content exists than actually does. For example, if a claim is made that a rubber sole of a shoe, was manufactured in the U.S., that part must be specifically referenced rather than the shoe as a whole. Tip: Qualified claims that use words such as "produced", "created", and "manufactured" imply the "all or virtually all" standard and generally need additional qualifications to clearly convey that these terms are limited to a particular part or process.

Comparative Claims make claims of your products U.S. origin content compared to another product or brand's origin. Examples of such claims include "Our product uses more U.S. content than all other camera manufacturers" or "Our new model uses 50% more U.S. content as the previous model". These claims are held to the same truth and good faith standards as unqualified and qualified claims.
Tip: Comparative claims must be substantial. A comparison claim against another manufacturer that proves only a small difference in U.S. origin, or a claim that a new model has "more" U.S. origin content but in reality only has 3% more, would both be considered deceptive claims.

Assembled in USA


Claims are valid for products with foreign components that have a substantial assembly process which principally takes place in the U.S. For a valid "assembly" claim, the last  "substantial transformation" of a product must take place in the U.S. Products meeting these standards can be advertised as "Assembled in the USA".
Tip: Be sure to pay careful attention to which portions of the assembly process takes place in the U.S. Assembly of foreign products at the end of the manufacturing process will generally not qualify.

For more information, check out the FTC guide to Complying with the Made In the USA Standard.

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Comments:

Absolutely true. Sadly many manufacturers play the word game and in this case it is appealing to Americans. I have been advocating long time for full disclosure of origin. Having "headquarters" in Dallas and plants in Shanghai does not make it Made in USA.I have been in the manufacturing industry for a decade and have seen the impact of oversee outsourcing first hand. But that is whole another discussion.In my eyes mislabeling a product is clear case of fraud and should be prosecuted to the fullest extent of law. Morally it is just wrong,too.A middle ground might be Apple; they state "designed by Apple, Palo Alto California, manufactured in China" , which legally protects them but sad they avoid supporting local manufacturers. we have dozens of qualified manufacturers in the Bay Area that could just as good if not better work as the shops oversee.Just my two cents.

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