Utah-based company settles with FTC after false ‘made in America’ claims
May 11, 2022, 7:10 PM | Updated: May 12, 2022, 9:14 am
A Utah-based company has signed a proposed settlement with the Federal Trade Commission after allegedly making false claims that its products were made in the USA.
Lions Not Sheep sells apparel and accessories through social media, on Amazon, and on Etsy.
The company’s owner, Sean Whalen, made several claims that their merchandise was “Made in the USA,” “Made in America,” and “100% AMERICAN MADE.” But the FTC says Whalen is not being truthful.
“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,” read a business blog on the FTC website.
The FTC has since issued a complaint that alleges Whalen and Lions Not Sheep, from May to October 2021, removed tags disclosing that items were made in a foreign county, even going so far as to print “Made in the USA” at the neck of shirts that were manufactured elsewhere.
“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,” stated the blog.
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 U.S. 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.