Tags

, ,

Lo-res_BM8BM3-SIn a recent abstract, we detailed how U.S. manufacturers had put new pressure on the Federal Trade Commission (FTC), asking it to apply existing rules regarding who may label their products as “Made in the U.S.A.” The FTC had announced its intention to rely more on warning letters, rather than impose the monetary penalties provided for by law.

Those intentions became reality even more recently, when the FTC found that four companies—Patriot Puck, a maker of hockey pucks; the mattress seller Nectar Sleep; and two separate sellers of tactical gear, Sandpiper and Piper Gear—falsely claimed their products were made in the United States, when instead all four of them manufacture the items they sell overseas, primarily in China. Competitors have claimed foul, noting that because of U.S. consumers’ preference for domestically made products, the false claims gave these companies an illegal, unjustified, and unfair advantage in the marketplace.

Although the FTC agreed with the illegality of their actions, it remains steadfast in its decision to stick with warning letters instead of imposing fines or any other punishment. The companies all agreed to stop using the claims about the U.S. origins of their products, but they were not required to notify existing customers of the false pretenses under which they had purchased their mattresses, tactical gear, or hockey pucks. Nor did the offending companies have to admit any wrongdoing publicly.

The outcome has left many consumers, advocates, and lawmakers confused and frustrated. Some lawmakers requested an explanation from the FTC, noting that the practices are harmful to U.S. manufacturers and consumers. Advocates argue that misleading consumers is always wrong and that firms must be held accountable for their actions. But thus far, the government agency maintains its confidence in the appropriateness of its actions.

 

Discussion Questions:

  1. Should the FTC fine or impose some other punishment on these companies?
  2. Do you look for “Made in USA” labels when you purchase products? How important is that information in your product choices?

 

Source: Annie Karni, “Companies Falsely Labeled Products ‘Made in U.S.A.’ Their Financial Penalty? $0,” The New York Times, March 6, 2019