Glue maker Chemence, Inc., and its company president James Cooke, have settled Federal Trade Commission charges that they supplied pre-labeled and pre-packaged glues with deceptive “Made in USA” claims to trade customers to use in marketing the strong, fast-acting glues under retailer brand names. The FTC settled an earlier suit against Chemence in 2016 for making deceptive Made in USA advertising claims for products sold under its own brand names, including Kwik Fix, Hammer Tite, and Krylex.
As part of the proposed settlement, Chemence and Cooke are required to pay $1.2 million to the FTC, the highest monetary judgment ever for a Made in USA case.
“Many people care deeply about buying American-made products,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “The FTC is dedicated to ensuring that marketers making deceptive Made in USA claims face the legal consequences of their actions.”
The FTC’s complaint alleges that Chemence and Cooke supplied glues in packages labeled with deceptive unqualified “Made in USA” claims, some with an image of the American flag, for products such as Master Super Glue, JB WELD SuperWeld, Stick Fast Instant CA Adhesive, Pink Gel Nail Glue, SAATI Ultrafix CA – MV, and Kiss Maximum Speed Nail Glue.
According to the complaint, in numerous instances, Chemence and Cooke represented in promotional materials they provided to trade customers that Chemence’s private-label and other products were all or virtually all made in the United States. In doing so, they provided the means and instrumentalities for these third-party retailers to deceive consumers, the complaint alleges. Despite Chemence and Cooke’s representations, in numerous instances, foreign materials accounted for more than 80 percent of the materials costs and more than 50 percent of the overall manufacturing costs for these products.
According to the complaint, the defendants’ actions violated their 2016 order with the FTC. Additionally, the complaint alleges that, in a 2017 compliance report, defendant Cooke falsely declared under penalty of perjury that Chemence had changed the labeling on all its cyanoacrylate glue/superglue adhesive products to read “Made in USA with US and globally sourced materials.”
Under the terms of the proposed order, Chemence and Cooke are prohibited from making unqualified U.S.-origin claims for any product, unless they can show that the product’s final assembly or processing—and all significant processing—takes place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States. Under the order, any qualified Made in USA claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, and/or processing. Finally, to claim that a product is assembled in the United States, Chemence and Cooke 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. The order also prohibits Chemence and Cooke from making any country-of-origin claim about a product or service unless the claim is not misleading, and they have a reasonable basis that substantiates their claim.
The order also contains provisions requiring Chemence and Cooke to (1) notify certain third-party trade customers of the order, and (2) provide compliance reports.
The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides further guidance on making non-deceptive “Made in USA” claims.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 5-0. Commissioner Rohit Chopra issued a statement. The FTC has published a description of it in the Federal Register. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. 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 up to $43,280.
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