According to the FTC, the new ruleIn addition to this, you will need to know more about it.Codifies for the first time potential fines for each offense. The FTC can now seek civil penalties of up to $ 43,280 for each violation of the rule.
The Commission said the rule should be particularly beneficial for small businesses legitimately making Made in USA claims but lacking the resources to defend themselves against imitators fraudulently making similar claims.
“The Final Rule provides substantial benefits to the public by protecting businesses from lost sales to dishonest competitors and by protecting buyers seeking to purchase products made in the United States. ” said FTC Commissioner Rohit Chopra. “More broadly, this long overdue rule is an important reminder that the Commission must do more to use authorities explicitly authorized by Congress to protect market participants from fraud and abuse.”In addition to this, you will need to know more about it.
Claims processing intensified after NAFTA
The process of developing a final rule on such claims began after the signing of the North American Free Trade Agreement (NAFTA) in 1994, which created a free trade area between Canada, Mexico and the United States. So far, the enforcement of such claims has been done without the imposition of sanctions.
According to the final rule, it is a deceptive act of “[L]abel any product as being made in the United States, unless final assembly or processing of the product takes place in the United States, any significant processing entering the product takes place in the United States, and all or virtually all ingredients or components of the product manufactured and purchased in the United States.In addition to this, you will need to know more about it.
Gold mine for class actions
While companies accused of breaking this rule have not faced civil penalties so far, according to the website publicity.orgThe alleged fraudulent claims made in the United States have been a gold mine for class action filers.
“You could supply a small store with the products that have been accused of being deceptively marketed as being made in the United States in recent years,” according to the site. The vast majority of cases filed during the 2012-2021 period analyzed by the organization were filed in California with a handful of cases filed in six other states. After 2015, the pace of these lawsuits slowed when California changed its law governing these claims.
The final rule includes specific guidelines for manufacturers of beef and shrimp products in response to requests from stakeholders in these industries.
How the rule applies to supplements
Dietary supplements are not specifically named in the document, but the final rule is of paramount importance to these manufacturers. Only a small subset of dietary supplements sold in the United States are made entirely from raw materials of domestic origin.
Loren Israelsen, president of the United Natural Prdoucts Alliance, said his organization conducted a study nearly 10 years ago on the amount of foreign material in dietary supplements sold in the United States. The study found that 80% of the constituents were of foreign origin.
“I think it might be a bit high now; I would say it’s closer to 72% to 75% “, Israel told NutraIngredients-USA.
“Statements made in the United States continue to be a priority for the Commission and companies must make it very clear that their statements in this area are 100% correct and true and not misleading”said Marc Ullman, lawyer for Rivkin Radler.
According to the final rule, a domestically produced claim without any qualifiers would be fraudulent even in cases where certain raw materials can only be obtained in other countries. The final rule, which the Commission says codifies FTC enforcement practices dating back to the 1940s, allows only an insignificant amount of foreign content to benefit from the claim.
Ullman said supplement makers who wish to emphasize their home connections must make carefully designed qualifying statements about the inputs into the product. “Made in the USA with domestic and imported ingredients” is one example.