Target Corp. Puts FTC's 'Made in USA' Claims to Bed

Federal trade regulators have dropped their investigation into Target Corp. over pillows that were advertised as "Made in USA" but were, in fact, manufactured in China.

Target Corp. is among the retailers that received letters from the New York attorney general's office requesting information on their on-call practices for employees. (Credit: Nate Grigg)

Federal trade regulators have dropped their investigation into Target Corp. over pillows that were advertised as “Made in USA” but were, in fact, manufactured in China.

In a letter to Target this week, the Federal Trade Commission said the retail giant’s Room Essentials-branded pillows were prominently marked “Made in the USA” on their exterior packaging. Consumers who purchased the pillows and opened the package reported the products were marked “Made in China.”

The agency closed its investigation without further action because Target pulled the mislabeled products from store shelves, corrected the country-of-origin information for its own-branded pillows and took steps to shore up packaging to prevent further consumer deception.

“Specifically, Target removed affected items from sales floors, hard-locked the items at the point-of-sale system so they could no longer be sold to consumers, and began work to remediate packaging,” FTC lawyer Julia Ensor wrote in the letter to Jason Walbourn, a Target assistant general counsel for regulatory, operations and investigations.

Companies regularly tangle with regulators over “Made in USA” claims, and the dispute flared during the presidential campaign. Then-candidate Donald Trump drew criticism for campaign hats that were manufactured overseas, and the now-president has taken to Twitter to criticize companies that have plans to relocate employee positions abroad.

To pass the FTC’s “Made in the USA” muster, a product must be “all or virtually all” manufactured in the United States. The agency’s determination hinges on the importance of any foreign parts to the overall function of a product.

The FTC in recent years ramped its push to police “Made in the U.S.A.” claims, often resolving claims through so-called staff closing letters—especially in situations in which a company took steps to address the complaints.

Target, according to the FTC, "implemented several longer-term process enhancements" to minimize inaccurate country-of-origin claims from vendors. The company brought together representatives from several teams—including the legal department, packaging and product safety and quality assurance. And the company implemented a new procedure to spot whether a proposed "Made in USA" claim meets federal guidelines.

Last year, the FTC sent 29 closing letters over “Made in the USA” claims. The agency had sent 28 closing letters for such claims in 2015—nearly double the 16 it sent in 2014. So far this year, the FTC has sent closing letters to three other companies— RGF Environmental Group Inc.Axis LED Group LLC and New Sensor Corp.

Very few companies go to court over “Made in USA” claims. Last year, the super-glue company Chemence Inc.—the Ohio-based manufacturer of KwikFix, Hammer-Tite and Flash Glue— agreed to pay $220,000 to resolve allegations that its “Made in the USA” claims deceived customers.

 

Originally published on Corporate Counsel. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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C. Ryan Barber

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