FTC Fines Apparel Brand $211K for False 'Made in USA' Labels
The FTC issued a fine against the apparel brand Lions Not Sheep for replacing its "Made in China" labels with "Made in USA" labels.
The FTC fined Lions Not Sheep owner Sean Whalen $211,335 for false labeling, as the products were, in fact, made in China. Additionally, the ruling stated that any qualified Made in USA products need to include "clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing."
Additionally, if Lions Not Sheep wanted to assert that a product is assembled in the U.S., Whalen and the brand "must ensure that it is last substantially transformed in the United States, its principal assembly takes place in the United States, and U.S. assembly operations are substantial."
Advertising a product as being made in the U.S. is a huge draw, especially with apparel, as manufacturers and suppliers want to distance themselves from cotton grown in China's Xinjiang region amidst claims of human rights abuse against the region's Uighur population. Consumers also tend to be willing to spend more on products that are made in the U.S.
Because of that, some companies have falsified made-in-the-USA claims as a means of attracting business and charging more for cheaper products actually sourced from overseas. Last March, Akin Kurji, owner and president of Gennex Media (dba Brandnex) reached a six-figure settlement with the FTC after his company falsely claimed online that its products were made in the U.S.
“This should be obvious, but you can’t say your products are made in the USA when most of them are made elsewhere,” Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, said in a statement at the time. “When companies like Gennex make this false claim, they hurt both people who want to buy American and companies that really do make things here.”
The FTC has begun cracking down on these claims as it enforces a new rule that tightens Made in USA labeling requirements under the Biden administration's "Buy American" plan. The rule requires marketers making unqualified Made in USA claims on product labels to be able to prove that their products are “all or virtually all” made in the U.S.
“You have a lot of textile items that tout the Made in the USA claim,” said Marcia Y. Kinter, vice president of government and regulatory affairs for PRINTING United Alliance “So, now, you’re looking at truly cracking down on that, because now you have other agencies that are having a requirement to buy American, which is a policy, and made in America, the Biden administration is looking at how that impacts the small and medium-sized business industry."