Old Southern Brass markets itself as a Florida-based glassware company that proudly honors and serves America’s veterans with special memorabilia such as shot glasses embedded with copper bullets.
The company once proclaimed on its American flag-adorned website: “‘No one in America likes to make products right here at home.'”
The Federal Trade Commission says Old Southern Brass’ glass products are manufactured in China.
The FTC has been monitoring false “Made in USA” claims for years, but it is cracking down on them. Since gaining power to impose new financial penalties three years ago, the company has targeted a variety of violators, including tractor companies.
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The increased attention to misleading claims coincides with the Biden administration’s broader push to encourage companies to expand U.S.-based manufacturing.
Photographer: Jonathan Furtarte/Bloomberg Law
At the same time, American customers want their purchases to stay in their communities and are willing to pay a premium to do so. Some people are taking their own stand against misleading marketing. Shoppers have proposed a class action lawsuit against the Reynolds aluminum foil manufacturer over its Made in America claims.
In other cases, the FTC has arranged refunds for buyers of mislabeled products. The ultimate goal is to level the marketing playing field for those who own products that can legally be considered American-made.
“They should be rewarded in the marketplace for that,” FTC Consumer Protection Director Samuel Levine said in an interview with Bloomberg Law. “They can’t realize those rewards if they have to compete with people who cheat.”
Companies are watching the agency’s efforts and seeking guidance from lawyers like Los Angeles-based advertising lawyer Robert Freund. Many people aren’t ready, he says.
“Despite increased regulatory attention, this is not on the radar of every brand or every marketer,” Freund said. “There are still a lot of blind spots.”
To be sold as 100% American-made, a product must contain few or no foreign components and final assembly must occur in the United States, according to the FTC. Promotions that use the U.S. flag or refer to U.S. headquarters or factories may also constitute a Made in USA claim, the agency said.
However, there is still room for definition. In one example cited in the FTC’s guidance, a company may sell a barbecue grill made in Nevada as made in the U.S. even if the knobs and tubes, which are an insignificant part of the overall product, come from Mexico. It is said that it can be done. Companies can also advertise their products as made in the United States with a disclaimer that distinguishes how much of the product is manufactured in the United States and how much is manufactured overseas.
“Standards can be difficult to interpret, and there can be ambiguity,” said Daniel Kaufman, former acting director of the FTC’s Bureau of Consumer Protection and now a partner at BakerHostetler.
An FTC investigation into Old Southern Brass (which the FTC publicly refers to as “Uncle Sham”) found that products such as $14.99 shot glasses were made in China. The Florida company also deceived customers by suggesting it was veteran-owned and would donate 10 percent of its sales to military support charities, regulators alleged.
Photographer: Jonathan Furtarte/Bloomberg Law
According to the FTC’s final order, the agency fined Old Southern Brass $4.6 million late last year but later reduced the penalty to $150,000, citing the company’s “inability to pay.”
Representatives for Old Southern Brass declined to comment.
In January, the FTC ordered the U.S. subsidiary of Japan-based tractor maker Kubota to pay $2 million for falsely labeling thousands of tractor replacement parts and other farm equipment as American-made.
Kubota acknowledged the misrepresentation, said it had cooperated, and said, “We regret that such a problem occurred.”
Levine said many FTC investigations begin with a tip from a competitor or an individual complaint to the agency’s tip line. Regulators then scrutinize public records to scrutinize a company’s imports and compare them to marketing claims. Investigators can also issue subpoenas to companies to request information.
The investigation into Cycra, a motocross and ATV parts maker that advertises its products as “proudly designed, developed, and manufactured in Lexington, North Carolina,” has led to U.S. Customs and Border Protection arresting some of its shipments from Taiwan. Things got serious after he was captured. Inside was a pre-assembled product with a “Made in USA” label affixed to it.
The FTC awarded a judgment of $872,577 in June 2023. Cycla ultimately wasn’t able to pay the full amount, but it still collected about $221,000 and plans to refund $180,000 to customers, the FTC said.
Cycla did not respond to a request for comment.
Other offenders escape civil penalties and get away with so-called “final letters” if they come clean and make amends. The same goes for electric dog fence company Extreme Dog Fence, which the FTC said in October corrected potentially misleading claims by removing some marketing descriptions and creating new advertising policies. Announced.
The Reading, Pennsylvania-based business’ website currently states that its fences are “manufactured in the United States using imported components.” This means jobs will be created here at home. ”
Photographer: Jonathan Furtarte/Bloomberg Law
Wilson Sporting Goods also finalized the deal after agreeing to update its promotional materials in response to questions about whether some youth soccer balls it had sold as made in the U.S. were produced in Vietnam. I received the letter. “We are pleased to work with the Federal Trade Commission to resolve this matter,” the company said in a statement to Bloomberg Law.
The records show the agency has issued at least 24 closing letters since 2022. FTC Chair Lina Khan mentioned the agency’s efforts against false made-in-America claims during a House hearing this month.
The FTC “will use every available tool to ensure that fraudsters who defraud consumers, honest businesses, and American workers face serious consequences for their illegal activities,” she said in written testimony. .
Mr. Freund, the advertising lawyer, said he always gets questions from his clients after the FTC files cases with record fines, like this year.
Clinton Yu, a partner at Burns & Thornburgh who advises companies on tariffs and import regulations, said companies typically review their supplies to ensure compliance with the FTC and other regulators. He said he is stepping up efforts to trace the chain.
Yu said the company also checks information from suppliers to support its claims “if the FTC comes knocking.”
This is a message that authorities have repeatedly preached.
“Why wait until the FTC or other law enforcement officials send a subpoena before instituting an internal compliance check?” an April post on the FTC’s website about the Williams-Sonoma case said. “It doesn’t have to be flashy. All you need is a file folder or relevant documentation on your network to support your claim.”
Image: Jonathan Hurtarte/Bloomberg Law
But for some companies, there is much more work to be done, especially if the Made in America claim is a big part of their image. “Sometimes you have to change your brand” to comply with FTC rules, Yu said.
Others remain defiant.
T-shirt maker Lion’s Knot Sheep has made $211,355 after regulators discovered an online video in which the company’s CEO said he had replaced “Made in China” labels on shirts with “Made in USA” labels. fined $. ” The FTC used the funds raised to issue refunds to approximately 12,000 customers.
The company did not respond to requests for comment. CEO Sean Whalen said in a response posted online that his company was targeted because it was selling anti-Biden apparel.
“They want to completely nuke every conservative company they can and wipe them out,” he said.
The FTC declined to comment on his claims.
Image: Jonathan Hurtarte/Bloomberg Law
Falling for false “Made in America” claims can also be a “publicity nightmare,” said Zlatko Hadjismailovic, partner and head of global trade and export control practice at McCarter & English. They say it has sex.
“Nobody using the Made in USA statement as a competitive advantage wants to be known as someone who has used it deceptively,” he said.
Backlash from customers can be particularly damaging. Two-thirds of U.S. consumers routinely seek out American-made products, according to a 2023 survey of nearly 1,000 shoppers by business intelligence firm Morning Consult. Shoppers seek American-made products for a variety of reasons, including safety, patriotism, worker rights, and environmental concerns.
In May, sneaker maker New Balance settled a lawsuit with a customer who claimed that some of its shoes were not made in the United States despite having names such as “Made in USA 990v2.” Foil giant Reynolds Consumer Products Co. has received similar complaints from shoppers who say they were tricked into paying a premium price by foil packaging that said “Made in the USA” on the box but wasn’t. are facing complaints.
Reynolds did not respond to requests for comment.
Photographer: Jonathan Furtarte/Bloomberg Law
Levine said online shopping can make it especially hard for consumers to detect misleading U.S.-made claims because they can’t physically inspect the product or its label. This makes it “easier and more tempting for companies to make deceptive claims,” he said.
The bill, known as the Country of Origin Labeling Requirements Act (COOL Act), would require online marketplaces and importers to prominently label the origin of the products they sell to meet requirements for brick-and-mortar stores. It would also expand the FTC’s authority to punish violators.
“Requiring online retailers to display labels and reveal where products are manufactured would make it easier and help fight fraudulent counterfeit products,” Baldwin said in an interview.
The bill passed the Senate Commerce Committee in December. Baldwin said it would likely be added as a non-controversial rider to must-pass legislation, such as the annual defense spending bill.
Depending on the industry, there are many benefits to manufacturing products in the United States. Especially for products made in China, there are no geopolitical risks and there is less risk of forced labor. U.S.-made products also have fewer supply chain disruptions, and companies generally have better control over inventory and quality control.
While some industries still tend to find it more expensive to manufacture products in the U.S. than overseas, reshoring is a “long game,” said Scott Paul, the association’s president. Alliance for American Manufacturinga partnership between American Manufacturers and the United Steelworkers.
“There are still many obstacles in the way, but things are better than they have been in the past,” he said.
Lisa Anderson, supply chain expert at LMA Consulting Group, said companies are now more broadly interested in reshoring and nearshoring than they have been in years past. Executives and board members see supply chain disruptions as headaches they want to avoid, from the uncertainty of the pandemic to the Panama Canal drought and Suez Canal disruptions.
“It’s definitely lingering in the forefront of executives’ minds,” Anderson said.
