United States – Corporate and Company Law – Podcast

In this episode of his “Clearly Conspicuous” podcast
series, “The FTC Takes Action Against Old Southern Brass for
False ‘Made in the USA’ Claims,” consumer protection
attorney Anthony DiResta examines Federal Trade
Commission (FTC) enforcement efforts regarding “Made in the
USA” claims. The FTC recently took action against Old Southern
Brass for falsely claiming its products were made in the United
States, the company was veteran-operated and proceeds of sales were
donated to military-focused charities. Mr. DiResta dives into the
FTC’s proposed order that prohibits the company from making
deceptive claims, requires a $150,000 payment and outlines strict
guidelines for future “Made in USA” claims. He highlights
the FTC’s current focus on “Made in USA” marketing,
emphasizing the importance for companies to adhere closely to FTC
guidelines when making such assertions.

Listen to more episodes of Clearly Conspicuous
here.

Podcast Transcript

Good day and welcome to another podcast of Clearly Conspicuous.
As we’ve noted in previous sessions, our goal in these podcasts
is to make you succeed in this current environment that’s very
aggressive and progressive, make you aware of what’s going on
with both the federal and state consumer protection agencies, and
to give you practical tips for success. It’s a privilege to be
with you today.

FTC Complaint Against Old Southern Brass for “Made in the
USA” Claims

Today we discuss yet another FTC action concerning “Made in
the USA.” The FTC — Federal Trade Commission — is
taking action against EXOTOUSA, doing business as Old Southern
Brass, for falsely claiming that certain company products were
manufactured in the U.S. and that the company was veteran operated
and donated 10 percent of its sales to military service charities.
The FTC’s proposed order would stop the company and its owner
from making these deceptive claims and require them to pay a
monetary judgment. The director of the FTC’s Bureau of Consumer
Protection said, “This company and its owner’s brazen
deception cheated consumers who wanted to support U.S.
manufacturing, veteran-operated businesses and veteran charities.
We will continue to hold accountable those who profit from false
Made in the USA and military association claims.” According to
the FTC complaint, Old Southern made many claims on its website and
in its advertising that the products it sold were made in the
United States, including one post featuring “‘Merica Gifts
for the ‘Merica Man in Your Life” that said, “All of
our products are 100% American made. And nothing says America like
making products right here at home for the American men and women
alike.” The complaint charges that in spite of such claims,
many of the company’s products were wholly imported from China
or contained significant imported content. In addition, the
complaint points to numerous instances where Old Southern claimed
affiliation with the U.S. military, including that the company was
veteran operated, donated 10 percent of sales to military service
charities and that it sold products that included bullets or
casings used by the U.S. military. One post on the company’s
website said, “As a veteran-operated business in the United
States, our mission is to give back to fellow American patriots who
have served and protected our country.” Despite the
company’s claims, the company was not operated by veterans, and
the products it sold as being used by the U.S. military were not
actually used by the U.S. military. The complaint also charged that
the company did not donate 10 percent of sales to veterans’
charities as claimed. In fact, the company claimed charitable
deductions that amounted to less than one half of 1 percent of
sales.

FTC’s Proposed Order

The FTC’s proposed order against the company and its owner,
which they have agreed to, prohibits them from making any false or
misleading claims, including any about affiliation with or support
of the U.S. military or veterans. It requires that $150,000 must be
turned over to the FTC. The order also includes a number of
requirements about the claims they made about the origin of their
products:

1. Restriction on unqualified claims. The company and its owner
   will be prohibited from making unqualified U.S. origin claims for
   any product unless they can show that the product’s final
   assembly or processing, and all significant processing, takes place
   in the United States and that all or virtually all of its
   ingredients or components of the products are made or sourced in
   the U.S.




2. Requirements for qualified claims. The company and its owner
   are required to include in any qualified “Made in the
   USA” claims a clear and conspicuous disclosure about the
   extent to which a product contains foreign parts, ingredients or
   components, or processing.




3. Requirements for assembly claims. The company and its owner
   must ensure, when claiming a product is assembled in the U.S., that
   it was substantially transformed in the U.S., its principal
   assembly takes place in the U.S. and U.S. assembly operations are
   indeed substantial.

The order includes a monetary judgment of $4,572,000, which is
partially suspended due to the defendant’s inability to pay the
full amount. Yet the commission finds that defendants lied about
their financial status. The full amount of the judgment could
become immediately payable. The FTC will publish a description of
the consent agreement package in the Federal Register very
soon. The agreement will be subject for public comment, after which
the commission will decide whether to make the proposed consent or
the final instructions for filing comments appear in the published
notice on regulations.gov.

Concluding Thoughts

So here’s the key takeaway. Claims of “Made in the
USA” are on the front burner of the FTC’s interest right
now. If you make such claims, pay very close attention to the rules
of the road as announced by the FTC. So please stay tuned to
further programs as we identify and address the key issues and
developments and provide strategies for success. I wish you
continued success and a meaningful day. Thank you.

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