Mattress company will pay $753,000 and cease Made in USA fraud
Resident Home LLC and owner Ran Reske, will pay $753,000 to settle FTC charges that they made false, misleading, or unsupported advertising claims that their imported DreamCloud mattresses were made from 100% USA-made materials.
Resident Home LLC is the parent of Nectar Brand LLC (better known as Nectar Sleep), a company that had previously agreed to a 2018 FTC administrative order resolving allegations that it falsely advertised imported mattresses as “Assembled in USA.” Following the 2018 order, Reske, under penalty of perjury, stated that Resident had never made U.S.-origin claims about its DreamCloud mattress. This proved to be untrue. The proposed order entered into today incorporates the terms of the 2018 order, orders the payment of $753,000, and expands the application of the 2018 order to all the entities under the control of Reske.
“Baseless claims that products are made in the USA hurt not only consumers but also honest businesses that build their products here,” said Samuel Levine, Director of the Bureau of Consumer Protection. “Unfortunately, we see too many repeat offenders like Resident Home, but thanks to the FTC’s recently finalized Made in USA Labeling Rule, companies that abuse these labels will face civil penalties in addition to other relief. We will not hesitate to seek strong penalties against Made in USA fraud.”
In the company’s promotional material, Resident Home LLC and Reske claimed that their DreamCloud mattresses were “proudly made with 100 percent USA-made premium quality materials.” But, according to the complaint, these repeat claims were false or misleading, and violated the FTC Act. The FTC says all DreamCloud mattresses are finished overseas and, in some cases, are wholly imported or use significant imported materials.
Under the terms of the proposed order, Resident Home LLC and Reske are prohibited from making several claims that deceive consumers and harm law-abiding businesses whose sales were siphoned because of this behavior. The order specifically covers unqualified U.S.-origin claims (claims made with no limitations) for any product – unless they can show that: the product’s final assembly, final processing, and all significant processing takes place in the United States; and all or virtually all ingredients or components of the product are made and sourced in the United States.
The order also governs any qualified Made in USA claims (claims that include explanatory information). For qualified claims, Resident Home LLC and Reske must include a clear disclosure about the extent to which the product contains foreign parts, ingredients, components, or processing. If they want to say a product is assembled in the United States, they must ensure that it is last substantially transformed in the United States, that its principal assembly takes place in the United States, and that United States assembly operations are substantial. Finally, the order requires Resident Home LLC and Reske to notify affected consumers about the FTC’s order and submit compliance reports.
The FTC’s Enforcement Policy Statement on U.S. Origin Claims offers guidance on making Made in USA claims. The Made in USA Labeling Rule went into effect on August 13, 2021. Companies that violate the Rule from that date forward may be subject to civil penalties.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 3-2, with the majority issuing a statement, Commissioner Rohit Chopra issuing a concurring statement, and Commissioners Noah Joshua Phillips and Christine S. Wilson issuing a joint dissenting statement. The FTC will publish a description of it in the Federal Register. Instructions for filing comments appear in the published notice. Comments must be received within 30 days of 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 $43,792.
The Federal Trade Commission works to promote competition, stop deceptive and unfair business practices and scams, and educate consumers. Report fraud, scams, or bad business practices at ReportFraud.ftc.gov. Get consumer advice at consumer.ftc.gov. Also, follow the FTC on social media, subscribe to press releases, and read the FTC’s blogs.