The Federal Trade Commission remains vigilant about protecting the integrity of “Made in USA” claims. This is evidenced by its recent settlement with Williams-Sonoma Inc. The FTC claimed that that the well-known home products and kitchen wares company deceptively represented that certain of its products were made in the U.S. when, in fact, they were wholly imported, or contained significant imported materials or components. Those products included its Goldtouch Bakeware products, Rejuvenation-branded products, and Pottery Barn Teen and Pottery Barn Kids-branded upholstered furniture products. Williams-Sonoma had claimed that all or virtually all of the products were made in the U.S.
As part of the settlement, Williams-Sonoma agreed to pay a $1 fine. Additionally, Williams-Sonoma may not make an unqualified claim that a given product was made in the U.S. unless it can show: a) that the product’s final assembly or processing – and all significant processing -takes place in the U.S., and b) that all or virtually all components of the product are made and sourced in the U.S. Unqualified claims, as the name suggests, is any claim that simply attributes the making and/or sourcing of the product to the U.S., such as “Made in the USA.” A qualified claim, on the other hand, attributes some aspects of the product to production or sourcing from outside the U.S., such as “Assembled in the U.S. with components produced elsewhere.” With respect to qualified claims, Williams-Sonoma is required to include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, components, and/or processing. If the qualified claim relates to assembly in the U.S., Williams-Sonoma is required to make sure that a) the product was last substantially transformed in the U.S., b) its principal assembly takes place in the U.S., and c) the product’s U.S. assembly operations are substantial.
The terms of the settlement are a bit harsher than other similar disputes, perhaps because this isn’t the first time Williams-Sonoma and the FTC have tangled over such claims. Back in 2018, Williams-Sonoma had claimed that its Pottery Barn Teen organic mattress pads were “Crafted in America from local and imported materials.” Yet, according to the FTC, the pads were made in China. Williams-Sonoma quickly corrected the information and agreed to undertake a larger review of its country-of-origin verification process. The FTC closed that investigation on June 13, 2018.
Clearly, the FTC continues to enforce its guidelines regarding “Made in the USA” claims, which generally requires that all or virtually all of the product be made in the U.S. And for large retailers, this can require strengthening its supply-chain verification procedures. But as the Williams-Sonoma settlement shows, neglecting to do so can be expensive and can damage a company’s goodwill. As Sergeant Phil Esterhaus used to say on Hill Street Blues, “Let’s be careful out there.”