FTC Takes Lithionics Battery to Court Over 'Made in USA' Claims

Lithionics Battery and its founder and owner Steven Tartaglia violated the law by falsely claiming their battery and battery module products were made in the U.S., the Federal Trade Commission said in an April 12 complaint in a Florida district court. By doing so, the company and its founder violated the Made in the USA Labeling Rule, the complaint said (United States v. Lithionics Battery LLC, M.D. Fla. #8:22-00868). The case marks the first enforcement action under the agency's new labeling rules (see 2107010077), the agency said.

Lithionics sells battery products for recreational vehicles, amusement park rides and low-speed electric vehicles, among other things. Per the complaint and other filings in the U.S. District Court for the Middle District of Florida, the FTC alleges that Lithionics falsely labeled its battery products as "Made in U.S.A." since 2018. In fact, the products are primarily made overseas, the complaint said. Tartaglia was listed as a defendant alongside the company since he had "sole responsibility" over Lithionics' marketing and labeling decisions, the FTC said.

The Made in USA Labeling Rule, however, bars companies from listing products as being made in the U.S. unless the final assembly or processing occurs in the U.S. or all or virtually all of its components are made and sourced in America. The FTC said Lithionics' products do not clear either of these standards and that its goods violate the labeling rule. As a consequence, the FTC is seeking for the court to "shut down bogus Made in USA claims" and have Lithionics pay civil penalties of over $100,000 -- a mark totaling three times its profits made on the allegedly illegal activity.

The FTC's proposed settlement agreement "includes injunctive provisions that will change how the defendants do business going forward," the agency said. "For example, the order prohibits them from making unqualified U.S.-origin claims unless they have proof that the product’s final assembly or processing -- and all significant processing -- takes place in the US and that all or virtually all ingredients or components are made and sourced here."

“As our country works to onshore production of lithium ion batteries, it’s critical that honest businesses have a chance to compete, and that consumers can buy American,” said Sam Levine, director of the FTC’s Bureau of Consumer Protection. “Falsely labeling batteries as made in the United States is against the law, and the FTC is using its new Made in USA rule to make sure this misconduct comes with a price.”