FTC to Propose New 'Made in USA' Regs With Stricter Enforcement, Application to Online Advertising

The Federal Trade Commission will soon issue a proposed rule that would strengthen its authority to impose penalties for “Made in USA” labeling violations and apply those rules to online advertising and marketing materials. Approved in a 4-1 FTC vote June 22, the proposal mostly codifies current guidance into new Made in USA regulations, though its broader definition of “label” sparked the lone “no” vote among the FTC commissioners and a partial dissent from another.

“The proposed Rule incorporates guidance set forth in the Commission’s previous Decisions and Orders and its 1997 Enforcement Policy Statement on U.S. Origin Claims, the FTC said in a news release. “[T]he rule will not impose any new substantive requirements on businesses, as they are already required to ensure Made in USA labels are accurate,” FTC Commissioner Rohit Chopra said in a statement concurring with the decision to issue the proposal. Comments will be due 60 days after the proposed rule is published in the Federal Register.

Consistent with past FTC guidance, the proposal prohibits any Made in USA claims on products “unless the final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and all or virtually all ingredients or components of the product are made and sourced in the United States.”

Crucially, the proposed rule includes provisions that apply that prohibition to mail order catalogs and mail order promotional materials, including those “disseminated in print or by electronic means, and that solicit the purchase of such product or service by mail, telephone, electronic mail, or some other method without examining the actual product purchased.” The proposal supersedes state Made in USA rules, unless those rules are more stringent than the proposed federal standard.

The FTC has never issued Made in USA regulations, instead directly enforcing provisions of the FTC Act that prohibit false Made in USA labeling claims. Issuing the regulations will give the FTC more leeway to rely on administrative penalty processes instead of having to seek court injunctions, preventing “time-consuming, resource-intensive gamesmanship around the contours of our authority,” Chopra said.

The perceived expansion of labeling prohibitions to the online realm sparked dissent among FTC commissioners. Though she voted in favor of the proposal, Commissioner Christine Wilson in a statement said that she disagrees with the proposal's scope. The relevant provision of the FTC Act is “titled ‘Labels on products’ and repeatedly references ‘labels.’ The Commission nonetheless has been urged to promulgate a rule that covers all advertising, not just labeling,” she said.

The proposed rule “could bring within the scope of the rule stylized marks in online advertising or paper catalogs and potentially other advertising marks, such as hashtags, that contain [Made in USA] claims,” Wilson said. It “defines the term far more broadly than any FTC precedent, and in a way that appears to exceed our statutory grant of rulemaking authority.”

“Our job is not to regulate beyond the lines Congress has drawn,” said Commissioner Noah Phillips, the lone vote against the proposed rule, in a dissenting statement.