‘Made in USA’ Cheats to Face Fines as FTC Steps Up Enforcement

(Bloomberg) -- Companies inaccurately using “Made in USA” labels will be subject to fines under a Federal Trade Commission rule that requires marketers prove their products are “all or virtually all” made in the country.

Every violation will be subject to civil penalties of as much as $43,280, the regulator said in a statement. The move, cleared by a 3-2 party line vote, doesn't force new requirements on businesses because it codifies FTC guidance into a formal rule. The FTC was given the power by Congress to fine violators in 1994 after the North American Free Trade Agreement took effect but only after it issued a rule.

“For decades, there has been a bipartisan consensus among commissioners that Made in USA fraud should not be penalized,” FTC Commissioner Rohit Chopra, said in a statement that was joined by fellow Democrats Lina Khan, the chair, and Rebecca Kelly Slaughter. “In my view, this policy posture was in direct contravention of both the letter and spirit of the law Congress enacted.”

In her dissent, Republican Christine Wilson said the regulator is overstepping its authority with the rule, which was proposed in June 2020. The new policy could be read as covering all advertising, she said, not just labeling.

Still, the public was “overwhelmingly” supportive of stricter enforcement, the FTC said. Ranchers and shrimpers, who have long complained that deceptive labeling hurts business, also backed the move. After the FTC's decision, Agriculture Secretary Tom Vilsack said his department is reviewing the “Product of USA” label.

“I hope the USDA will study the FTC's rulemaking record carefully and come to the same conclusion I have: the USDA's Product of USA standard is misleading and distorts competition,” Chopra said.