New Balance Athletic Shoes, Inc. and Hyde Athletic Industries, Inc. have agreed to settle Federal Trade Commission charges that they misrepresented that all of their athletic footwear is made in the United States when a substantial amount is made wholly abroad. In addition, New Balance has agreed to settle charges that it falsely represented that it annually exports to Japan hundreds of thousands of pairs of athletic shoes that are American made. The proposed agreements to settle these allegations would prohibit both Hyde and New Balance from misrepresenting, in any manner, that footwear made totally abroad was made in the United States.
The proposed settlements do not address "Made in USA" claims for shoes made partially from domestic parts and labor and partially from foreign parts and labor. Whether unqualified "Made in USA" claims for such products can be made is currently under review by the FTC, following a public workshop the FTC held in March. In the meantime, the FTC withdrew charges it brought against New Balance and Hyde in September 1994 regarding such claims.
The proposed consent agreement settling the amended charges against New Balance would prohibit the company from misrepresenting: (a) that footwear made wholly abroad is made in the United States; and (b) the quantity of footwear it exports.
The proposed consent agreement with Hyde would prohibit the company from misrepresenting that footwear made wholly abroad is made in the United States. The proposed consent agreement also contains a provision indicating that Hyde would not be in violation of the order if the company makes truthful statements about domestic production of footwear, so long as it is accompanied by one of the following disclosures, in a clear and prominent manner:
That provision does not apply to any representation relating to footwear made wholly abroad.
In addition, the proposed consent agreements contain a number of recordkeeping requirements designed to assist the FTC in monitoring compliance with the orders.
The proposed consent agreements will be published in the Federal Register shortly. They will be subject to public comment for 60 days, after which the Commission will decide whether or not to make them final. Comments should be addressed to: FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
These cases were handled by the FTC’s regional office in Chicago. The Commission vote to accept the proposed consent agreements for public comment was 4-1 with Commissioner Roscoe B. Starek III dissenting. In his dissenting statements, Commissioner Starek reiterated his objections to the Commission's decisions to drop its challenges to unqualified "Made in USA" claims for products assembled in the United States from foreign and domestic parts. "As I have consistently stated, case-by-case enforcement -- rather than a regulatory proceeding -- is the appropriate means to evaluate the 'Made in USA' standard." He also observed that "since a majority of the Commission has opted to conduct a broad review of the 'Made in USA' standard, ... it is premature for the Commission to condone use of the Made in USA claims set forth in the [Hyde] safe harbor until it proclaims what the standard is."
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.
Copies of the complaints, proposed consent agreements, an analysis of each agreement to aid in public comment, and Commissioner Starek's dissenting statements, as well as other documents associated with the FTC’s examination of "Made in USA" advertising claims, are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov
Elaine D. Kolish
Bureau of Consumer Protection
(FTC File Nos: New Balance -- D. 9268; Hyde Athletic -- 922 3236)