Continuing its focus on “Made in the USA” claims, the Federal Trade Commission (“FTC” or “Commission”), on February 1, applied its standard for those claims to “Built in the USA” claims by entering into a settlement with water filtration company, iSpring Water Systems, LLC (“iSpring”).
In a move that appeared contrary to previously released guidance, the FTC action seemed to equate the term “built” with “made” rather than the term “assembled.” iSpring had claimed that its water filtration systems and parts were “Built in the USA,” but the FTC pointed out in its complaint that the products were either “wholly imported” or “made using a significant amount of inputs from overseas.” As a preliminary part of its analysis concluded that the company’s claim was deceptive, the FTC must have determined that “Built in the USA” was the equivalent to an unqualified “Made in the USA” claim. The FTC’s standard for “Made in the USA” claims is that the manufacturer should have a reasonable basis to back up the claim that the product is “all or virtually all” made in the U.S. The Commission therefore concluded that iSpring was deceiving consumers with misleading claims about the origin of its products.
In 1998, the FTC released guidance determining that consumers would interpret the term “manufactured” to be the equivalent of “made.” The guidance distinguished those terms from the term “assembled”, clarifying that a product that includes foreign components may be labeled “Assembled in the USA” without qualification when its principal assembly takes place in the U.S. and the assembly is “substantial.”
But in this case, the word at issue was “built.” By applying the “Made in the USA” standard to “Built in the USA” claims, the FTC appeared to equate “built” with “made” or “manufactured” rather than with “assembled.” Empirical evidence as to how consumers actually interpret the term “built” might help to demonstrate its reasonably held meaning. As it currently stands, it is unclear whether the word “assembled” is still considered distinct from the term “made,” or whether it, too, might be held to a “Made in the USA” standard.
The FTC continues to be serious about “Made in the USA” claims. We will keep you updated on developments in this area.