Major U.S. Manufacturers Agree to Settle Charges of Making Misleading "Made in USA" Claims

The Federal Trade Commission today announced settlements with six companies that would resolve allegations that the companies made misleading "Made in USA" claims for a variety of products. The FTC has charged that The Stanley Works, American Honda Corporation, Kubota Tractor Corporation, Johnson Worldwide Associates, Inc., USDrives Corporation, and Rand International Leisure Products, Ltd. misrepresented that certain of their products are made in the United States, i.e., that all, or virtually all, of the parts of the products are made in the United States, and the labor in manufacturing the products is performed in the United States. According to the FTC, these representations were false or misleading because these products were actually made with significant foreign components or labor. In each of the cases, the proposed settlement would prohibit the companies from misrepresenting the extent to which their products are made in the United States.

In December 1997, after a comprehensive policy review, the FTC concluded that "Made in USA" advertising and labeling claims will continue to conform to the "all or virtually all" standard that traditionally has been applied by the Commission. Under this standard, voluntary, unqualified U.S. origin claims must be substantiated by evidence that a product is "all or virtually all" made in the United States. In addition, the agency issued an Enforcement Policy Statement outlining the factors the Commission will consider in determining whether a U.S. origin claim is "deceptive." In December 1998, the FTC issued a new business guide: "Complying with the Made in USA Standard" that describes the principles of the FTC's law and policy governing such claims and uses examples to help businesses comply with the law.

THE CASES:

The Stanley Works, incorporated in New Britain, Connecticut, is a manufacturer and marketer of tools, hardware, doors, and home decor products for professional, industrial, consumer, and home improvement use. Stanley manufactures mechanics tools with the brand names "Husky" (which Stanley manufactures for sale by Home Depot) and "Proto" (which Stanley sells to industrial distributors who in turn sell to industrial and professional end-users). According to the complaint, Stanley stamped many of these mechanics tools with a "USA" mark, advertised them as "Made in USA," and sold them in packages marked "Made in USA." Nevertheless, certain models of Stanley's mechanics tools, including combination wrenches, standard sockets, teardrop ratchets, and sets containing combination wrenches and standard sockets, were not all or virtually all made in the United States. Significant proportions of their content was of foreign origin. The proposed agreement would order Stanley to stop misrepresenting the extent to which Stanley's mechanics hand tools are made in the United States.

The FTC's investigation of Stanley Works was conducted in close cooperation with the offices of the Connecticut and Missouri Attorneys General.

American Honda Motor Co., Inc., a U.S. subsidiary of Honda Motor Co., LTD of Japan, is a California corporation, and is the domestic distributor for all Honda automobiles, motorcycles, and power products, including lawn mowers. The FTC's complaint alleges that advertisements provided by Honda and placed by local dealers for three American Honda lawn mower models (the Honda Masters, the Honda Harmony II 3-in-1, and the Honda Harmony II), included the logo stating "Made in America by Honda." The dealers are located in Illinois, Oklahoma, Florida, Alabama, and Ohio.

The FTC's complaint charges that the three lawn mower models are not all or virtually all made in the United States because a substantial portion of the components of the lawn mowers was of foreign origin. The proposed settlement would prohibit American Honda from misrepresenting the extent to which any lawn mower is made in the United States.

Kubota Tractor Corporation is a California corporation that distributes and sells Kubota-brand lawn tractors, lawn mowers, and related products in the United States through approximately 1,100 dealers. Its lawn tractors are manufactured by Kubota Manufacturing of America Corporation, an affiliated corporation based in Gainesville, Georgia.

The FTC alleged that Kubota prepared ads that were placed by local dealers of Kubota's T-Series Lawn Tractors stating that these tractors were "Made by Kubota in the U.S.A." The complaint alleges that Kubota misrepresented that the entire line of T-Series Lawn Tractors is "Made in the USA" because one of the three models within the line (T1760) contains significant foreign parts. It also alleges that Kubota misrepresented that model T1760 is "Made in the USA." The complaint further alleges that Kubota misrepresented that the entire line of TG-Series Lawn Tractors is "Made in the USA" because both models that make up the series contain significant foreign parts. Finally, the complaint alleges that Kubota misrepresented that the individual models TG1860 and TG1860G are "Made in the USA" because both models contain significant foreign parts.

The proposed settlement would prohibit Kubota from misrepresenting the extent to which any lawn tractor or lawn and garden tractor, or lawn tractor or lawn and garden tractor product line, is made in the United States.

Johnson Worldwide Associates, Inc. is a Wisconsin corporation that markets over 500 outdoor recreation-related consumer products, such as fishing products, outdoor equipment, watercraft, and motors. The FTC's complaint alleges that Johnson's claims in advertising that its Super Mono fishing line is "MADE IN THE USA" are false or misleading because it is not all or virtually all made in the United States, i.e., "a substantial portion of the labor and components of 'Spiderwire' product is, or has been, of foreign origin." The complaint also alleges that Johnson's claims on packaging that its Super Mono fishing line is "MADE IN THE USA of American and Japanese components" is false or misleading because the fishing line is totally made in Japan and only the packaging and incidental materials contain U.S. components or U.S. processing. The proposed settlement would require Johnson to cease and desist from misrepresenting the extent to which any fishing product is made in the United States.

USDrives Corporation, headquartered in Fremont, California, is the subsidiary of a Taiwanese manufacturer, Pan-International Industrial. Until late April 1998, USDrives manufactured and sold CD-ROM drives that were assembled in the United States. In May 1998, USDrives moved its assembly operations to Asia. According to the FTC's complaint, USDrives misrepresented that its CD-ROM drives were "made in the USA" when they were actually assembled in the United States of primarily imported parts. The CD-ROM packages contained express and implied "Made in USA" claims. One package featured the statement "Made in the USA" in red and blue, the "USDrives" name in red, white, and blue, and the American eagle. Another package featured the statement "Well Made in the USA" (with a red, white, and blue flag logo), the American eagle, the Statue of Liberty, and the "USDrives" name in red, white, and blue. With regard to the CD-ROM drives that are now made in China, the complaint alleges that, notwithstanding the inconspicuous statement "Made in China" on the bottom and side panels of product packages, USDrives has misrepresented that the drives are made in the United States, when, in truth and in fact, they were made in China of primarily non-U.S. parts.

The proposed settlement would prohibit USDrives from misrepresenting the extent to which any CD-ROM drive is made in the United States.

Rand International Leisure Products, Ltd., a New York corporation, is a wholesaler of imported bicycles and accessories. The settlement resolves allegations that Rand's packaging for its "Signature Self-Sealing" bicycle tire tube (which includes a self-sealing fluid to prevent a flat tire) misrepresented the origin of the product. On the outside of the package is the statement "Made in the U.S.A." However, the FTC's complaint alleges that Rand's Signature Self-Sealing Tubes are not all or virtually all made in the United States, because a substantial portion of the labor and components of Rand's Signature Self-Sealing Tubes is, or has been, of foreign origin. The settlement agreement would prohibit Rand from misrepresenting the extent to which any product is made in the United States.

In all of the cases, the proposed settlements include a "safe harbor" provision that permits the companies to represent that any of the products covered under their respective orders are made in the USA, as long as all, or virtually all, of the components of such products are of U.S. origin, and that all, or virtually all, of the labor in manufacturing such products, is performed in the United States. In addition, each of the proposed settlements contain a number of recordkeeping and reporting requirements designed to assist the FTC in monitoring compliance with the terms of the orders.

The Commission vote to accept the proposed consent agreements for public comment was 4-0. Announcements regarding the proposed consent agreements will be published in the Federal Register shortly. The agreements will be subject to public comment for 60 days, after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: Consent agreements are for settlement purposes only and do 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 $11,000.

In addition to announcing these cases, the FTC has issued a Consumer Alert concerning the use of Made in USA advertising and labeling claims. Copies will be available from the FTC's HomePage at: http://www.ftc.gov

Copies of the complaints, proposed consent agreements and an analysis of each to aid in public comment as well as the business guide and Enforcement Policy Statement are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File Nos: Stanley Works: 982 3570; American Honda: 982 3600; Kubota: 982 3591; Johnson Worldwide Associates: 992 3019; US Drives: 982-3587; Rand: 992 3006)