Here’s the thing about nectar. It can be sweet, but sticky. People who paid Palo Alto-based Nectar Brand LLC for mattresses labeled “Designed and Assembled in the USA” thought they were getting a sweet deal. In fact, buyers were stuck with mattresses imported from China, already completed. The company, which also uses the names Nectar Sleep and DreamCloud, performed no assembly operations in the United States. Thus, the FTC’s complaint alleges that the company’s “Assembled in USA” claim is deceptive.
To settle the case, Nectar Brand has agreed that it won’t represent – expressly or by implication – that a product is made in the United States unless the final assembly or processing of the product occurs in the U.S., all significant processing that goes into the product occurs in the U.S., and all or virtually all ingredients or components are made and sourced here. The settlement gives the company another option, however. The company may include a clear and conspicuous qualification immediately adjacent to the claim that accurately conveys the extent to which the product contains foreign parts, ingredients or components, or processing. (The proposed order includes a detailed definition of “clear and conspicuous.”)
For a claim that a product is assembled in the United States, the product must be last substantially transformed in the United States, the product’s principal assembly must take place in the U.S., and United States assembly operations must be substantial. The order also prohibits any claim about the country of origin of any product unless the representation is true and at the time it is made, the company has a reasonable basis for the representation.
The FTC is accepting public comments about the proposed settlement until April 12, 2018.
What can other companies learn from the lawsuit? Claims like Made in USA or Assembled in USA are more than just marketing talk to slap on a webpage or label. They’re express product representations that demand careful substantiation. Given how important USA claims are to many consumers, companies have an obligation to comply with the law. That starts with one simple principle: Tell the truth.