Understanding “All or Virtually All” of the Rules of the “Made in the USA” Product Label

Advertising that a product is “made in America” or “made in the U.S.A.” is a very effective sales strategy, according to recent polls. An Adweek Media/Harris Poll conducted in July 2010 found substantial support for domestic-made products, with sixty-one percent of nationwide respondents saying they would be more likely to purchase a product labelled “made in the U.S.A.” Only three percent said they would be less likely to buy something. In California and the rest of the West Coast, about fifty-seven percent said they would be more likely to buy “Made in the U.S.A.” products.

Because labelling or claiming a product as “Made in the U.S.A.” makes a statement about the product’s origin or quality, the Federal Trade Commission (FTC) views it as a form of advertising. It is therefore subject to deceptive trade practice regulations. Labelling can be express, meaning an actual label appears on the product, or implied, meaning that the product’s marketing states or strongly implies U.S. origin. The rules apply not only to product labels, but to any marketing activity, such as print, television, or internet advertising.

The FTC’s rules can be complex and cumbersome, but every California business that wants to use the label needs to understand their responsibilities. Businesses that make unqualified claims that a product is “made in the U.S.A.” could face legal consequences if their claim is false or unsupportable. The federal Lanham Act allows anyone damaged by a false or misleading claim of a product’s origin, such as a competitor, to sue for damages.

The FTC is an independent federal agency responsible for enforcing and promoting consumer protection laws. Very few products are required to disclose their origins: textile, wool, and fur products; and automobiles. For other products, the “Made in the U.S.A.” label is optional. The FTC has long required that products advertised as “Made in the U.S.A.” must be “all or virtually all” made here, but different industries and market sectors realistically require different types of regulation and oversight. The FTC revised its labelling regulations in 1997 and offers guidance on how different industries and products may satisfy the “all or virtually all” standard.

In a policy statement issued in 1997, the FTC sets out its basic standards for the “Made in the U.S.A.” label and the “all or virtually all” standard. It interprets the standard as requiring that “all significant parts and processing” involved in the product originate in the U.S. Foreign content, or foreign involvement, ought to be negligible. The final production stage for a product must occur in the U.S. The FTC, in reviewing an unqualified origin claim, will look, among other factors, at a product’s manufacturing costs and the distance of its foreign sources to assess how much of its production is “foreign.”

The California business lawyers at the Law Offices of Salar Atrizadeh represent individuals and businesses seeking assistance navigating the regulatory and transactional pitfalls of state and federal regulations. Our team combines legal knowledge with technological skill to find innovative solutions for our clients. Contact us today online or at (310) 694-3034 to schedule a confidential consultation.

Web Resources:

Complying with the Made in USA Standard (PDF), Federal Trade Commission, December 1998
More Blog Posts:
Legislative Efforts to Regulate Online Transactions, Internet Lawyer Blog, February 11, 2012
CAN-SPAM ACT, Internet Lawyer Blog, October 27, 2011