Last year, several companies who claimed to be “Made in America” were exposed for manufacturing their products overseas. The companies included Patriot Puck, Sandpiper, and PiperGear. Patriot Puck, a New Jersey-based company, deemed their hockey pucks “The Only American Made Hockey Puck!” The other two companies marketed their activewear as “#MadeinUSA”.
The Federal Trade Commission found the companies guilty of violating federal law with false marketing and “unfair or deceptive acts”. To the public’s surprise, a Republican majority of the FTC voted to only give them a warning. This way, the companies wouldn’t have to admit any wrongdoings. They would simply sign agreements that threatened fines if they were to have a repeat offense.
Democrats Oppose the Decision
This decision garnered its fair share of backlash, specifically from Democratic lawmakers. A group of Democratic senators wrote to the FTC days after, strongly urging them to rethink their decision. “If companies that break our laws do not face financial penalties, then our American manufacturers are severely undermined,” wrote Ohio state Senator Sherrod Brown. “We need stronger enforcement by the FTC and greater transparency when it comes to the commission’s actions to crack down on these violators.”
The FTC voted again last Wednesday. Two Democratic appointees voted to impose fines and three Republican commissioners overruled them.
Many people are commenting on the irony of the decision. President Trump, who appointed the Republican commissioners, signed a “Buy American and Hire American” executive order back in April 2017. The order specifically states that its goal is “to ensure that American labor is hired to do the job.” Over the past two decades, companies who have falsely used “Made in the USA” labels were only given a slap on the wrist. As no companies have faced financial or legal punishments, the cycle will likely continue.
“If not addressed, this can hurt the value of the ‘Made in America’ label,” said CEO of Made in America Inc., Don Buckner. “Supporting American manufacturing unifies all sides and the FTC is there to help protect American-made brands. I think there should be significant repercussions for fraudulent claims. We hope manufacturing jobs continue to come back to the U.S. so that more products can be truly ‘Made in the USA’.”
Last week, FTC Commissioner Rohit Chopra tweeted “After catching companies lying about their products made in the USA, the agency essentially voted to let them off scot-free. Tough loss for honest companies and their employees who make products here at home.” He also issued an official statement outlining how the FTC should defend the “Made in America” label.
As Chopra explains, companies that manufacture within the U.S. usually make financial sacrifices to make quality American products. When companies falsely market their foreign goods as USA-made, they undermine the value of the “Made in America” label. Chopra highlights that almost 80 percent of Americans prefer American-made products over products manufactured offshore. Sandpiper and Patriot Puck kept their prices low, attracting the consumer through the “Made in America” label and extremely cheap prices. The two qualities usually do not coincide.
Since the FTC has a long history of letting companies that violate this rule off with a warning, more brands continue to do it. Chopra urges that the FTC “activate a legal switch to ‘turn on’ civil penalties for the first offense.” Under this, companies would face more than $42,000 in fines for each violation. This way, companies will not even be tempted to break the rule and the pattern of false marketing will come to an end.
To activate the civil penalty that Chopra speaks of, the FTC would need to codify the “Made in USA” labeling standard. Once codified, the FTC could more easily impose fines and companies would have a clear idea of what really makes a product “Made in America”.
Under the “Made in USA” labeling standard, the FTC states that “all or virtually all” of the product’s parts and labor must be from the USA.