Hunton Retail Law Resource

The FTC, through the Department of Justice, has entered a settlement with two companies and the joint corporate President for falsely claiming that the LED lighting products and personal protective equipment (PPE) they sold were “Assembled in the USA,” “Buy American Act Compliant,” “Manufactured in the USA” and “100% Made in the USA,” despite having been imported from China. According to the FTC’s complaint, the defendants, Axis LED Group, LLC, ALG-Health LLC and Adam J. Harmon, went so far as to peel “Made in China” stickers off the products and replace them with Made in USA labels. The FTC had previously investigated and warned the companies, and received assurances that they would remove unqualified Made in USA claims from their marketing materials. The defendants subsequently were investigated by the National Institute for Occupational Safety & Health (NIOSH) over safety superiority claims for their KN95 masks.

The settlement requires the companies to:

• Stop claiming their products are Made in the USA unless all significant processing and the products’ final assembly takes place in the US and all or virtually all components are made and sourced in the US.
• Substantiate all Made in USA and COVID-19 claims.
• Pay $157,683.37 civil penalty. The defendants are also subject to a $2.8 million redress judgment, suspended due to their inability to pay.

This is the FTC’s second Made in USA case filed this year, and its third filed since enacting its Made in USA Rule.

With the new threat of civil penalties authorized under the FTC’s Made in the USA Rule, it’s even more important that companies ensure they understand the pitfalls of making domestic origin claims.