The International Business Transactions Blog

FTC’s Crackdown on Abuse of “Made in USA” Labels

By BethEl Nager
Law Student Editor

The Federal Trade Commission (FTC) is the U.S. agency tasked with protecting consumers and enforcing certain antitrust laws. Recently, the FTC has brought a claim of exceptional magnitude against a company accused of violating its “Made in USA” standards, set forth in its Enforcement Policy Statement on U.S. Origin claims. This standard requires that “all or virtually all of the products be made in the United States in order to use this (or similar) phrasing or logos on a product or packaging label. All items sold and marketed in the USA must comply with the labeling requirements.

Chemence Inc., a glue producer, labeled its product as “Made in USA” and depicted an American flag on the packaging. Chemences’ glue was not made “all or virtually all” in the United States, per the FTC requirement. The manufacturer made its glue in the United States from components sourced from other countries, which were not identified on the label. Additionally, Chemence provided its distributors with deceptive promotional materials maintaining the “Made in USA” façade.  This issue became especially problematic because Chemence was selling its product to unrelated companies to be marketed under other trademarks, and which also were represented as “Made in the USA.”

In 2016, the FTC filed a complaint against Chemence and other glue manufacturers due to the misuse of the “Made in USA” label.  Initially, Chemence was fined $220,000 and was required to show the products were finalized in the US, most of the processing occurred in the US, and “all or virtually all” of the components were from the United States. If Chemence could not prove these elements, it was forbidden to display “Made in USA” on the packaging.   

The FTC filed a new complaint in 2020 against James Cooke, the president of Chemence, and the company itself. Cooke was accused of falsely reporting that Chemence complied with the 2016 relabeling requirement. The FTC claimed Chemence continued to label the glue with “Made in USA” and used foreign-sourced chemicals, without qualifying language.

After the 2020 complaint, the FTC, Chemence, and Cooke agreed on a settlement. In it, the parties agree that Chemence will submit annual reports to the FTC detailing its compliance with the “Made in USA” regulation, and it will explain to its distributors that its products contain foreign-sourced chemicals. Most importantly, the settlement includes a monetary penalty of $1.2 million, “the highest settlement amount ever paid in a “Made in USA” case.

Other companies will likely take the Chemence case as a strong warning of the FTC’s seriousness about enforcing the “Made in USA” policy.

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