FTC Tells Congress it Will Explore Tougher Penalties for Made in USA Fraud; Agency Plans Workshop

Kelley Drye

On May 9, the Federal Trade Commission Chairman and Commissioners testified before the House Committee on Energy and Commerce’s Subcommittee on Consumer Protection and Commerce on a number of issues. Reaffirming a previous commitment for increased scrutiny of deceptive Made in USA” advertising, FTC Chairman Simons told Congress the agency plans to hold a workshop in which it will more closely examine penalties and remedies.

During the hearing, Congressman Tony Cardenas (D-CA) expressed concern about the lack of Made in USA” enforcement activity and urged a more aggressive approach. Chairman Simons said the agency has historically relied upon injunctive relief in Made in USA” cases, but the upcoming workshop would provide a venue for current Commissioners to examine how to beef up” remedies going forward. Commissioner Chopra, who has been outspoken on the issue, stressed the need for monetary penalties to deter future violations and protect honest” American manufacturers.

This hearing comes after the FTC Commissioners testified before the Senate Commerce Committee’s Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security addressing three settlements that came under scrutiny, which we previously wrote about here.

As we’ve tracked here, the FTC initiated talks of stricter enforcement of penalties and remedies for Made in USA” fraud that includes the workshop referenced by Chairman Simons to Congress. Commissioner Chopra released a statement calling for more stringent enforcement of the agency’s Made in USA” advertising policies, as he emphasized in his testimony above.

In an April 2019 settlement, a US-based marketer of water filtration systems agreed to pay a civil penalty of $110,000 in addition to injunctive measures to settle false claims charges brought by the FTC in 2017. The company admitted to deceiving consumers with Made in USA” advertising when in fact the marketer’s filters are either wholly imported or are made with a significant portion of parts from overseas. The admission of deceptive conduct is new term in FTC settlements, and has the potential to increase liability given the likelihood of follow-on regulatory investigations or consumer class litigation. This case is also notable because it is one of relatively few in which the FTC has sought civil penalties.

With this context in mind, advertisers relying on Made in USA” claims may want to revisit the FTC’s guidance on Made in USA” claims to ensure they are in compliance. For more information on Made in USA” advertising, check out our webinar and materials.