Policies & Issues

FTC Looking to Levy First Fine Under New ‘Made in USA’ Rules

Policies & IssuesApr 21, 2022

FTC Looking to Levy First Fine Under New ‘Made in USA’ Rules

It has brought a complaint against a battery maker labeling its products as “Made in U.S.A” when some parts allegedly come from China.

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Washington, D.C.—The Federal Trade Commission is looking to issue its first fine under the new rules regarding when products can be labeled, marketed, and sold as “Made in the U.S.A.”

The FTC announced last week it has brought a complaint against a company called Lithionics Battery LLC and its founder, owner, and general manager, Steven Tartaglia.

Based in Clearwater, Florida, Lithionics designs and sells batteries and battery accessories for boats as well as recreational and low-speed electric vehicles.

In the complaint, the FTC alleges the company labeled its products with an American flag surrounded by the words “MADE IN U.S.A,” with some product packaging also displaying the statement “Proudly Designed and Built in USA.”

The company used this label and similar origin claims on its website and social media platforms, including in YouTube videos. It also published a chart in its marketing materials highlighting the “advantages” of its products over “imports,” the complaint states.

However, the lithium ion cells the company used were made in China and its battery management systems “incorporate significant other imported components,” the FTC alleges, in violation of the new Made in the USA Labeling Rule.

The attorney listed in court documents as representing Lithionics and Tartaglia, John Dicks II of Akerman LLP, did not respond to an email and voice message left Wednesday seeking comment on the case. 

 Related stories will be right here … 

Under the Made in the USA Labeling Rule, which went into effect in August 2021, it is considered unfair or deceptive to label any product as Made in the United States unless “the final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and all or virtually all ingredients or components of the product are made and sourced in the United States,” per the FTC.

An FTC official clarified that the commission has issued decisions and orders on “Made in USA” claims since the 1940s.

What the labeling rule did was codify the established principle that when consumers see claims of “Made in the USA,” “American made,” etc., they believe that no more than a de minimis amount of the product is of foreign origin.

In the Lithionics case, the FTC wants the court to levy a civil penalty of a little over $105,000, three times its profits attributed to “illegal” activity. It also wants the court to prohibit Lithionics from making “unqualified” U.S. origin claims going forward.

The FTC referred the complaint to the U.S. Department of Justice, which filed it and the proposed settlement in a Florida federal court on the FTC’s behalf.

It is up to a federal judge to decide if or when to sign the settlement.

For additional guidance on the standards that must be met to claim that a product is “Made in the USA,” visit the FTC website.

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