FTC Proposes Made in USA Labeling Rule That Would Allow Civil Penalties

The Federal Trade Commission on June 22, 2020, proposed a Made in USA Labeling Rule. It would turn the agency’s long-standing guidance on USA-origin claims into a formal rule and let the FTC seek civil penalties from violators.

The FTC also released a staff report on its September 2019 Made in USA workshop. The proposal was published in the Federal Register on July 16, 2020, with comments due by September 14, 2020.

What the proposal says

Under the proposed rule, a label could carry an unqualified Made in USA claim only if:

• final assembly or processing of the product happens in the USA;
• all significant processing that goes into the product happens in the USA; and
• all or virtually all ingredients or components are made and sourced in the USA.

The proposal also covers labels with unqualified Made in USA claims in mail order catalogs and mail order advertising. It says it does not override other federal or state country-of-origin labeling laws.

Why penalties matter

Commissioner Rohit Chopra said that codifying the guidance would let the Commission seek civil penalties of up to $43,280 per violation. He said the rule would not add new substantive requirements for businesses.

The Commission voted 4-1 to publish the proposal. Commissioner Noah Joshua Phillips voted no. Chopra and Commissioner Christine S. Wilson issued separate statements.

“Whether a product is actually ‘Made in the USA’ is an important issue for consumers, manufacturers, retailers, and American workers.”

Andrew Smith, Director, FTC Bureau of Consumer Protection

FAQ

When was the rule proposed?

June 22, 2020. It was published in the Federal Register on July 16, 2020.

What standard would it codify?

Final assembly, all significant processing, and all or virtually all components in the USA.

What penalties could apply?

Civil penalties of up to $43,280 per violation, according to Commissioner Chopra.