Fake 'Made in the USA' cases have increased dramatically since 2016. Here's why. (2024)

When Lions Not Sheep was fined more than $200,000 for ripping out Made in China labels to replace with Made in the USA tags, it was just the latest example of the FTC's stepped-up enforcement.

Sarah Elbeshbishi|USA TODAY

The $200,000 fine levied against a Utah clothing company for ripping out "Made in China"tags and replacing them with "Made in the USA"labels is just the latest example of the Federal Trade Commission's stepped-up enforcement efforts that started during President Donald Trump's administration.

Lions Not Sheep was fined $211,335 after claiming that the company’s apparel was American made and adding “Made in the USA” tags to its internationally imported products, according to the FTC.

This week, the FTC also filed a complaint against a marketer after claiming that Adam J. Harmon and two companieshe controls falsely told consumers that the personal protective equipment they sold during the pandemic was American made.The commission referred the complaint to the U.S. Justice Department, but the order would require Harmon and the companies to pay $157,683 as a civil penalty.

The string of complaints comes after the FTC codified a new ruling to deter manufacturers from falsely labeling products with “Made in the USA” tags, which some experts have attributed to the increased number of complaints the commission has filed in the last year.

“They tightened things up and then they really started acting, going after violators more so than in the preceding couple of decades,” said Charles Lindsey,an associate marketing professor at the University at Buffalo School of Management.

The rule change last summer was in line with the agency's trend in stepped-up enforcement: 70% of the fake "Made in the USA"cases filed in the past two decades have come since 2016. Those 14cases only account for the number of formal complaints the agency filed and do not include the FTC's other methods to encourage compliance.

Over the past 20 years "there were not a lot of enforcement actions but there was a lot of the FTC noticing these false claims, reaching out to companies and correcting them in a more informal way," Alex Brown, a partner at Alston & Bird, told USA TODAY.

"It was always being policed to a certain extent. It just wasn't the public enforcement that you've seen uptick over the course of the last five, six, seven years," said Brown, who has more thana decade of experiencewith FTC inquiries.

Brown credits the change in the number of formal complaintsto the change of FTC leadership,noting that this issue was among former Commissioner Rohit Chopra's enforcement priorities when he assumed therole in 2018.

Fake 'Made in the USA' cases have increased dramatically since 2016. Here's why. (3)

Fake 'Made in the USA' cases have increased dramatically since 2016. Here's why. (4)

WATCH: Trump's 2020 Campaign Banners are Being Made in China

President Trump is known for being critical of American companies sending jobs and production abroad to places like China. Veuer's Sam Berman has the full story.


What the new rule says about 'Made in the USA' fraud

The recent addition is considered a “restatement rule” since it does not impose any new obligations on manufactures, instead it reaffirms and clarifies already existing guidance, which willtrigger stricter sanctions against violators, according toa July 2021 statement byChopra.

The newly affirmed rule states that a product’s final assembly or processing must take placewithin the U.S., all significant processing of a product must occur in the U.S. and that all or most of the product’s components are made and sourced within the U.S. to qualify as an American made product.

The rule only applies to labeling claims and will allow the commission for the first time to impose civil penalties of up to $43,280 per rule violation.

“I think what the FTC is clearlydoing is they’re sending a message to those companies that may be in the gray area about if they’re made in America or not. And they’re sending a public warning that says, ‘Don’t mess with that. Don’t take liberties here … we are regulating,” Kelly Goldsmith, a marketing professor at Vanderbilt University, told USA TODAY.

The financial motive for fake 'Made in the USA' tags

Goldsmith also noted that the FTCmay be working to dissuade manufacturers from falsely labeling products as American-made as the incentive to do so increased withthe pandemic.

“I think after what we lived through with COVID and the pandemic, I think there’s a lot more hesitation among consumers about consuming things that have this kind of large international footprint,” Goldsmith said.

“We got COVID that traveled across international borders. We’ve got monkey pox that traveled across international borders, and I think that it may be illogical to worry … but that doesn’t matter because consumers don’t make decisions based on logic. A lot of the decisions they make are based on emotion,” she added.

While consumer behavior has shifted because of the pandemic, Americans’ desire to purchase American-made goods predates the global health crisis.

A 2013 survey showed that 78% of Americans would rather buy American products and more than 60% would be willing to spend as much as 10% more on American-made goods, according to Consumer Reports National Research Center.

Nearly a decade later, those sentiments held up: A Harris Poll and Retail Brew survey last month showed that 71% of Americans intentionally purchased American products and nearly half of those polled would be willing to pay up to 20% more for American-made products.

“I think ultimately there was a fear if you don’t enforce it, ultimately it becomes meaningless and consumers might not be willing to pay more,” Lindsey added. “I think there was a lot of pressure because of that to maintain the integrity of what it means becauseresearch shows, surveys show it’s so valuable.”

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Fake 'Made in the USA' cases have increased dramatically since 2016. Here's why. (2024)


What is the made in USA rule? ›

According to the Federal Trade Commission, “Made in USA” means that “all or virtually all” the product has been made in America. That is, all significant parts, processing and labor that go into the product must be of U.S. origin.

What is the penalty for made in USA? ›

Violations of the Made in USA Rules may be punished with civil penalties of up to $51,744 per violation, with violations counted liberally. Over the past several years, the FTC has pursued increasingly larger civil penalties from companies alleged to have deceptively labelled products as Made in USA.

What is the difference between Made in USA and Made in USA? ›

"Made in USA" and "Made in the USA" are same in its meaning but has marketing strategy and significance. When a consumer sees a product is "made in the USA" they perceive this as higher quality and "THE" is stressing word its an assurance to customers about the complete manufacturing of the product in USA.

Why does Made in USA matter? ›

American-made products come with the guarantee that the manufacturer meets American standards. From cleaner manufacturing practices to health and safety product regulations, American-made goods are a responsible and environmentally friendly option for consumers.

How do I report fake made in USA? ›

If you believe that a product promoted as “Made in USA” is not America-made or contains significant foreign parts or processing, file a complaint with the FTC. Call, toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at www.ftc.gov.

Can I say made in USA? ›

Thus, a Made in USA claim, like any other objective advertising claim, must be truthful and substantiated. A representation may be made by either express or implied claims. “Made in USA” and “Our products are American made” would be examples of express U.S. origin claims.

Is made in the USA a selling point? ›

American consumers are price-wary, but they're also patriotic. If your business makes or sells products that are entirely American made, it doesn't just make great business sense—promoting it can be a powerful marketing tool.

What is the US made in America policy? ›

When the U.S. government spends your hard earned tax dollars on American goods, we ensure our future is made in America. “Made in America” policies are designed to increase reliance on domestic supply chains and ultimately reduce the need to spend taxpayer dollars on foreign-made goods.

What is the meaning of made in the USA? ›

A Made in USA mark is a country of origin label affixed to American-made products that indicates the product is "all or virtually all" domestically produced, manufactured and assembled in the United States of America. The label is regulated by the Federal Trade Commission (FTC). 1926 Ford Model T hubcap made in USA.

What is the made in the USA bill? ›

The Made in the USA Tax Credit Act, as it's known, seeks to revitalize American manufacturing by providing up to $2,500 in tax credits to individuals and $5,000 for couples purchasing goods that meet the Federal Trade Commission's (FTC) Made in the USA standards, which require that a product must be "all or virtually ...

What is the product of USA rule? ›

The claims, “Product of USA,” “Made in the USA,” and displays of the U.S. flag may be used only if the product is derived from animals born, raised, slaughtered, and processed in the United States.

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