Archive for the ‘Advertising’ Category

FTC Consent Order Settles Charges that Company’s “Made in USA” Certification Deceived Consumers Monday, February 16th, 2015

February 16, 2015 In November, the Federal Trade Commission (FTC) issued a final consent order settling charges that an Ohio-based company, Made in the USA Brand, LLC, (the “Company”) deceived consumers by licensing its “Made in USA” certification mark for use on products without either verifying the accuracy of the “Made in USA” claims or disclosing to the public that some of those licensees had self-certified their product’s “Made in USA” status.

The Enforcement Policy of the FTC with respect to Made in USA claims requires that products using a claim of US origin be “all or virtually all” made in the United States. The Order prohibits the Company from making deceptive claims or providing companies that it certifies with the means to deceive consumers regarding any products’ claim of U.S. origin.

The Certification logo:  On its website and brochures, the Company claimed, “The Made in USA Brand Certification Mark provides a standard symbol for Made in USA product identification…. When printed on labels by accredited manufacturers, consumers are able to identify at a glance which products are made in the USA.”

Based on its investigation, the FTC found this statement to be false and misleading, alleging that, since 2009, the Company had:

  • Sold licenses to use its “Made in USA” certification mark through its website, for annual fees of $250 to $2,000 depending on licensee’s sales.
  • Granted licenses to use its certification mark to any company, product, or entity that paid the licensing fee and stated that its products met the standard for U.S. origin claims.
  • Never rejected a license application or terminated a license.
  • Falsely represented in its promotional materials that its customers’ products depicting its certification marks had been independently and objectively evaluated for compliance with U.S. origin claims.

As is typical in Consent Orders, the Company neither admitted nor denied the allegations in the Complaint.

The FTC Order requires that, going forward, the Company must either have competent and reliable evidence substantiating the Made in USA claim for every product that carries its certification mark, or, the Company’s certification mark, and its seal, logo, brand, and other promotional materials must clearly and prominently disclose that the Company’s customers may self-certify that their products meet Made in USA standards.

The revised logo on the Company’s website now looks like this:

Our thoughts: The FTC has come back to this point time and time again, always emphasizing that, as stated in this case, “As U.S.-origin claims become more material to some consumers, those consumers increasingly rely on seals and certification programs to confirm that such claims are credible.” It seems likely that FTC enforcement activity will remain robust for certification programs such as “Made in USA,” “green” and other areas of interest to today’s consumers. See our companion post on the recent FTC Order regarding the Trustee online privacy certification.

The Order demonstrates the importance of two FTC pillars: claims substantiation, and clear and prominent disclosure. In its Order, the FTC uses both pillars to craft a remedy to ensure the future credibility of certification marks used by Made in USA Brand, LLC and its licensees. Competent and reliable evidence is required to substantiate a Made in USA claim. But if the Company wishes to allow its licensees to self-certify their Made in USA status, the Order requires that the certification mark and all related promotional materials must clearly and prominently disclose that its licensees may self-certify their product’s compliance with the FTC’s Made in USA rules. At that point, presumably, the obligation of having competent and reliable evidence, shifts solely back to the licensee. We find it odd that the FTC did not impose a higher standard on the Company that it have at least a modicum of credible support that the licensee meets the Company’s standard for use of the Company’s logo. After all, of what value is a certification mark that has no standards that must be met?

Finally, it is surprising this case took so long to come to light. According to the FTC’s allegations, the Company’s seemingly brazen marketing activities began in 2009. It is a lesson to all that just because we haven’t heard about an FTC investigation/enforcement action in a certain area doesn’t mean the Agency is a sleeping dog on the topic.

Brace for Increased Consumer False Advertising Suits in Wake of Recent California Supreme Court Opinion Tuesday, February 8th, 2011

February 8, 2011 — “Simply stated: labels matter.” So reasoned the California Supreme Court in a recent opinion that will undoubtedly result in an increase in the number of unfair competition and false advertising suits in California.

The Court held that consumers who purchase a product in reliance on a false claim have standing to sue the manufacturer under California’s unfair competition and false advertising laws, even if the product was not defective, overpriced or of inferior quality.  Kwikset Corporation v. Superior Court of Orange County, No. S171845 (Cal. Sup. Ct. Jan. 27, 2011).  (more…)