Natural Products Insider

MAY-JUN 2018

INSIDER is the leading information source for marketers, manufacturers and formulators of dietary supplements, healthy foods and cosmeceuticals. Since 1997, INSIDER has been serving the needs of the global nutrition industry.

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42 INSIDER May/June 2018 Despite the relaxation of U.S. enforcement of many federal regulations since the start of the Donald Trump administration, one area where we continue to see continued (or even stepped up) regulatory activity relates to claims that products are "Made in the USA." It stands out in contrast to the tsunami of deregulation. ' Made in the USA' Standards Under the standards fi rst set by FTC in 1997, "all or virtually all" of a product must be made/produced in the United States to legally bear an unqualifi ed claim. In other words, such a product must have all its important components originating from U.S. sources, and fi nal assembly or processing must take place in the United States. A "negligible" amount of foreign content is nevertheless permitted. U.S. content must be declared on automobiles and furs. Exactly how FTC looks at these issues is discussed in a guidance document explaining compliance standards. A review of this document is strongly recommended prior to making any "Made in America" claims. The guidance stated: Claims can be express: "Our products are produced only in America." They can be implied: "Our products are produced with true American workmanship," or use an American fl ag on a product advertisement or label. The claim can be in a company or brand name: "Made in America Inc." A company known to have its headquarters in the United States is not a representation that it will sell only goods of U.S. origin. Once it determines a claim has been made, FTC will consider whether the claim is unqualifi ed or qualifi ed. If unqualifi ed, the product must be comprised of "all or virtually all" components produced and assembled in the 50 states, the District of Columbia, and the U.S. territories and possessions. As with other product claims, "Made in the USA" must be substantiated with "competent and reliable" evidence supporting the proposition. This can include an analysis of the manufacturer's cost to produce the product, as well as good faith reliance on suppliers' representations that components used in production are U.S.-sourced. However, it would be wise to identify a specifi c representation, such as a statement like, "We certify that the material we are supplying to you has at least ___ percent U.S. content." Qualifi ed "Made in the USA" claims are permitted so long as they are truthful and nonmisleading. "Made of U.S. and imported parts" is a perfectly acceptable claim where appropriate, as is "Assembled in the USA" and "Designed in America, produced in India." As with unqualifi ed claims, it is essential to have competent and reliable evidence. Comparative claims such as, "We use more ingredients sourced in the United States than any other vitamin manufacturer," are also permitted, so long as they can be substantiated. Recent Enforcement Actions FTC announced the resolution of a "Made in the USA" enforcement action in each of the fi rst three months of 2018. Bollman Hat Co. (January): According to the complaint, the company blatantly misrepresented the origin of over 70 percent of the hats sold by it and subsidiaries. Many other hats that were represented as "USA products" contained signifi cant amounts of imported material. The false claims were made with a seal stating, "Made in America Matters," which was affi xed to its products and licensed to third parties. In a court-ordered settlement, Bollman and its subsidiaries "are prohibited from making unqualifi ed U.S.-origin claims for their products unless they can show that the products' fi nal assembly or processing—and all signifi cant processing—take place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States." iSpring Water Systems LLC (February): The complaint alleged the maker of water fi ltration systems deceived consumers with false, misleading or unsupported claims that its products were "Built in USA" when they were wholly imported or were made using a signifi cant amount of inputs from overseas. Under the settlement agreement and injunction, the company is barred from making unqualifi ed "Made in USA" claims unless it can show that the products' fi nal assembly or processing—and all signifi cant processing—take place in the United States, and that all or virtually all ingredients or components of the products are made and sourced in the United States. Block Division Inc. (March): FTC alleged that, over a number of years, Block Division's pulleys featured imported steel plates that entered the United States from overseas already stamped "Made in USA" and that Block Division used unqualifi ed "Made in USA" claims in advertising on its website, in stores, through trade shows and authorized dealers, on social media, and through fl yers and pamphlets. Under the court-ordered consent injunction settling the case, the company is prohibited from making unqualifi ed "Made in USA" claims unless it can show the products' fi nal assembly or processing—and all signifi cant processing—take place in the United States, and that all or virtually all ingredients or components of the products are made and sourced in the United States. While none of these cases involved monetary penalties, future violation almost certainly will, and will also potentially result in a contempt of court fi nding. Marc S. Ullman, of counsel, Rivkin Radler (rivkinradler.com), represents clients in matters r elating to all aspects of FDA and DEA matters, regulatory issues, FTC proceedings and litigation. He practiced with one of New York's leading white collar criminal defense fi rms for 10 years, where he represented clients in both federal and state prosecutions, as well as numerous related civil matters and other litigations. 'Made in the USA' Claims: Handle With Care by Marc Ullman Legal: FTC Enforcement

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