Hunton Retail Law Resource

On January 26, 2024, the FTC announced that it had entered into an agreement with tractor maker Kubota North America Corporation, settling allegations that Kubota falsely labeled some of its replacement parts as “Made in USA” despite manufacturing those parts entirely overseas. The FTC’s complaint was filed along with a consent order that requires Kubota to pay a $2 million civil penalty, the largest penalty ever assessed for violations of the FTC’s Made in USA Labeling Rule. The consent order also requires Kubota to comply with the FTC’s requirements for Made in USA claims.

According to the FTC, since at least 2021, Kubota has mislabeled thousands of replacement parts for its products as “Made in USA” despite manufacturing the products entirely overseas. The agency’s complaint also alleges that Kubota failed to update its product labeling after it moved certain manufacturing abroad, leaving the products incorrectly labeled as “Made in USA.” The FTC previously sued Kubota in 1999 for misrepresenting that its lawn tractors were “Made in USA,” and Kubota was subject to a consent order that expired in 2019.

Under the consent order, Kubota will be required to pay a $2 million civil penalty to the US Treasury. The order also prevents Kubota from making unqualified US-origin claims for Kubota products unless it can show that the final assembly or processing—and all significant processing—of the products occurred in the United States using all or virtually all US-sourced components. The order further requires Kubota to clearly disclose the extent to which a product contains foreign parts, ingredients or processing if making a qualified “Made in USA” claim. Finally, Kubota is prohibited from claiming a product is assembled in the United States unless the product was last substantially transformed in the US, its principal assembly takes place in the US and US assembly operations are substantial.

This case follows several other examples of the FTC’s crackdown on allegedly false and misleading “Made in the USA” claims. Companies marketing their products as “Made in USA” should consult the FTC’s Enforcement Policy Statement on US Origin Claims and Made in USA Labeling Rule to ensure compliance with FTC requirements.