FTC Announces $2 Million Penalty over Made in USA Claims
I’ve never owned a tractor, but based on Kenny Chesney’s 1999 hit She Thinks My Tractor’s Sexy, I understand that some people find them to be quite alluring. (The same goes for farmer’s tans, but that’s more relevant to this post.) It’s not clear whether Kenny’s girlfriend was particularly attracted to American-made tractors, but some people are. That’s why Kubota Tractor Corporation used to label their tractors as “Made in USA.”
The same year Kenny released his song, the FTC sued Kubota alleging that the company’s “Made in USA” claims were false because some models contained significant foreign parts. To settle the case, Kubota agreed not to advertise products as Made in USA unless “all, or virtually all, of the component parts of such product, or of all products in such product line” were made in the USA.
By 2021, Kubota’s order had expired and Kenny’s girlfriends seemed to be into different things, but the allure of a good American-made product never fades. Kubota labelled thousands of tractor parts as “Made in USA,” even though that wasn’t always accurate. For example, the FTC alleges that Kubota continued to use those labels even after it started to make some products outside of the country.
The FTC recently announced that Kubota agreed to settle the case. Here are some highlights from the order:
- If Kubota makes an unqualified “Made in USA” claim, it must be able to show that the product’s final assembly or processing—and all significant processing—takes place in the USA, and that all or virtually all ingredients or components of the product are made and sourced in the USA.
- If Kubota makes a qualified “Made in USA” claim, it must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, or components, or processing.
- If Kubota makes an “Assembled in USA” claim, it must ensure that the product is last substantially transformed in the USA, that its principal assembly takes place in the USA, and USA assembly operations are substantial.
- Kubota must pay a civil penalty of $2 million, the largest ever in Made in USA case.
As we’ve noted before, different people are turned on by different things. Regardless of how you feel about tractors and tractor parts, this case holds some important lessons for any company that makes “Made in USA” (or similar) claims. If you’re making these types of claims, consider how your practices stack up against the requirements outlined above.
For more coverage on Made in USA issues, click here.