“BEST DAMN AMERICAN MADE GEAR ON THE PLANET” So roared to a Utah-based company called Lions Not Sheep in promoting its apparel and accessories online. But according to an FTC complaint, the company was pulling the wool over consumers’ eyes. Lions Not Sheep just signed a proposed settlement with the FTC over the company’s allegedly false Made in USA claims.
Lions Not Sheep sells merchandise through social media, on Amazon, and on Etsy. It has described itself as a lifestyle brand that allow customers to “show people it’s possible to live your life as a LION, Not a sheep.” The company and its owner Sean Whalen pitched their politically-themed hats, tees, sweatshirts, etc., with claims that their merchandise was “Made in the USA,” “Made in America,” and “100% AMERICAN MADE.”
But compare that with a video Whalen posted on his social media accounts. Featuring a Chinese flag and the title “MADE IN AMERICA !,” the video showed Whalen claiming he could hide the fact that his shirts are made in China by ripping out the origin tags and replacing them with Made in USA tags. And according to the FTC, that’s just what Whalen and his company did. The complaint alleges that between May and October 2021, Whalen and Lions Not Sheep removed tags disclosing that items were made in a foreign country and went so far as to print “Made in USA” at the neck of shirts that were manufactured elsewhere. The FTC says that in most cases, the products advertised with Made in USA promises were wholly imported with limited finishing work performed in the United States.
The complaint alleges that Whalen and Lions Not Sheep violated the FTC Act by falsely advertising products as Made in USA. In addition, the complaint charges them with violating mandatory country-of-origin labeling rules that apply to products covered by the Textile Act.
The proposed settlement includes a $211,335 financial remedy and prohibits any misleading or unsubstantiated claim for any product or service. In addition, Whalen and Lions Not Sheep are prohibited from making Made in USA claims unless the final assembly or processing of the product occurs in the USA, all significant processing occurs here, and all or virtually all ingredients or components are made and sourced here. “Assembled in the USA” claims require that the product’s principal assembly takes place in the USA and that the US assembly operations are substantial. Once the proposed settlement is published in the Federal Register, the FTC will receive public comments for 30 days.
The case suggests some compliance takeaways for other businesses.
Keep your Made in USA claims Yankee Doodle Dandy. “Made in USA” isn’t just flag-waving puffery. It’s an objective claim that companies must substantiate with solid proof. Misleading Made in USA claims inflict an injurious double-whammy. They harm consumers who rely on those representations in making purchase decisions. And they illegally take business away from competitors who work hard to comply with the “all or virtually all” standard.
Clothe your clothing claims in credibility. In addition to the FTC Act’s general prohibition of deceptive claims, apparel covered by the Textile Rule is subject to mandatory country-of-origin labeling. Unfamiliar with that requirement? Consult the Textile Fiber Products Identification Act Rules and read the FTC’s guide for business, Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts.
Deceptive Made in USA claims can cost you. If you’re covered by the FTC’s new Made in USA Labeling Rule, misleading representations can result in substantial civil penalties. The Rule also reinforces the long-standing principle that it’s a violation of the FTC Act 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.”