Hunton Retail Law Resource

The FTC unanimously agreed to an enforcement action against American textile manufacturer Electrowarmth Products, LLC and the company’s owner for deceptively marketing its heated “bunk warmer” mattress pads products as Made in the USA. According to the FTC’s complaint, Electrowarmth’s products, while marked as being domestically made, were wholly manufactured and packaged in China, thus violating the Textile Act and the FTC’s Textile Rule. While the proposed settlement agreement contains an $815,000 monetary judgment, payment of the redress amount is suspended upon the defendants’ inability to pay.

The FTC, through the Department of Justice, has entered a settlement with two companies and the joint corporate President for falsely claiming that the LED lighting products and personal protective equipment (PPE) they sold were “Assembled in the USA,” “Buy American Act Compliant,” “Manufactured in the USA” and “100% Made in the USA,” despite having been imported from China. According to the FTC’s complaint, the defendants, Axis LED Group, LLC, ALG-Health LLC and Adam J. Harmon, went so far as to peel “Made in China” stickers off the products and replace them with Made in USA labels. The FTC had previously investigated and warned the companies, and received assurances that they would remove unqualified Made in USA claims from their marketing materials. The defendants subsequently were investigated by the National Institute for Occupational Safety & Health (NIOSH) over safety superiority claims for their KN95 masks.

The FTC continues its pursuit of deceptive Made in USA claims, this time with allegations that company Lions Not Sheep and its owner, Sean Whalen, marketed apparel as being “Made in USA,” “Made in America,” “100% AMERICAN MADE,” and “BEST DAMN AMERICAN MADE GEAR ON THE PLANET” when in fact the products were made in China. According to the FTC, Whalen appeared in social media posts claiming he could conceal the fact that his politically-themed hats, t-shirts, sweatshirts, and other apparel were of Chinese origin by removing the labels and replacing them with express markings that they were “Made in USA.”

The FTC entered into a consent order with Lithionics Battery LLC and its General Manager, settling allegations the company misrepresented its lithium ion cells are made in the United States. This is the first case the FTC has brought under its new civil penalty authority provided in the Made in USA Labeling Rule, which we wrote about last summer.

At the Federal Trade Commission’s (FTC) July 1 meeting, it finalized a new “Made in USA” Rule that was almost two decades in the making. The FTC issued a notice of proposed rulemaking in June 2020 and received 700 comments from stakeholders. During that time, the FTC has aggressively policed Made in USA claims (through an enforcement policy statement), settling a historic, million dollar follow-on Made in USA enforcement action and obtaining a six-figure settlement with an online retailer.

Gennex Media LLC, a customizable product online marketplace, and its sole officer and shareholder Akil Kurji, have agreed to an FTC consent decree resolving allegations the company falsely claimed its Brandnex novelty products were “Made in USA,” “USA MADE,” and “Manufactured Right Here in America!” when, in many instances, they were wholly imported from China. Gennex heavily promoted its products’ domestic origin on social media, declaring they “support USA jobs.” In a unanimous decision, Gennex and its principal were ordered to pay $146,249.24 and were required to cease making claims that its customizable promotional products, including wristbands, lanyards, temporary tattoos, and buttons, are made in America.

This past week, several consumer actions made headlines that affect the retail industry.

Nectar Brand to Put Its “Made in America” Claims to Bed

Nectar Brand LLC has agreed to stop making unqualified claims that its mattresses were made in the United States. According to the FTC’s complaint, Nectar Brand sells mattresses under several brand names, including Nectar Sleep, DreamCloud LLC and DreamCloud Brand LLC. Nectar Brand’s ads and product labeling included statements that the products were “Designed and Assembled in USA.” In fact, the FTC alleged that the mattresses all are imported from China and that Nectar Brand has no assembly operations in the U.S.

Under the settlement terms, Nectar Brand is prohibited from representing that its products are made in the United States unless it can substantiate its claims. Further, Nectar Brand’s officers are prohibited from misrepresenting the country of origin of its products.