Bollman Hat Company, and its wholly-owned subsidiary SaveAnAmericanJob, LLC (collectively referred to as “Bollman”) sells hats under various brand names, such as Bollman, Country Gentleman, Karen Kane, and Bailey Western, amng others, as well as several prviate label brand names. Recently, Bollman entered into a settlement with the Federal Trade Commission (the “FTC”) regarding its allegedly false country of origin claims and certifications. Under the settlement, Bollman has agreed to stop making false claims that its products are all or virtually all made in the United States, and to stop deceptive use of its “American Made Matters” certification and marketing materials. This is the third case the FTC has brought regarding deceptive Made in the USA claims in the last twelve months evidencing that the FTC is cracking down on these types of unsubstantiated claims.
In the complaint, the FTC alleged that Bollman deceived consumers with “Made in USA” claims for its hats and third-party products, namely that it marketed hats with claims such as “American Made Matters”, “Choose American”, and “Made in USA since 1868”, when in fact more than seventy percent of their hats are wholly imported as finished products and that of the remaining styles, many contain significant imported content. The FTC further alleged that Bollman made deceptive claims for its own and third-party products through a U.S. origin seal they introduced in 2010, known as “American Made Matters.” The FTC alleged that in addition to using the “American Made Matters” seal to market its own products, Bollman licensed the seal to any company that claimed it had a United States-based manufacturing factory or one product with a U.S. origin label, and met several membership requirements, including self-certifying that at least fifty percent of the cost of at least one of their products was incurred in the United States, with final assembly or transformation in the U.S., and paying an annual licensing fee of $99. Bollman has represented to consumers that the seal was “for consumers looking to shop for American made products directly from our members and sponsors.” The FTC alleged that the seal falsely represents that the companies and products using it have been endorsed or certified by an independent third party, and that Bollman possesses competent and reliable evidence that products carrying the seal are all or virtually all made in the United States. The FTC alleged in its complaint that despite these claims, Bollman does not have this evidence and has used the seal to promote its own products when those products actually contain significant imported content.
Under the terms of the proposed settlement, Bollman will be prohibited from making unqualified US origin claims for their products unless it can show that the products’ final assembly or processing, as well as all significant processing, take place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States. Furthermore, any qualified Made in USA claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, and/or processing. Bollman will also be required to disclose any material connection it has with any certification it uses to promote its products. Bollman will also be prohibited from claiming that a product or service meets its certification standard unless an entity with no material connection to it independently and objectively evaluates the product or service, or it discloses that certified products or services meet the standard through self-certification.
The proposed order also prohibits Bollman from making untrue, misleading or unsubstantiated country-of-origin claims in its marketing materials about any product, as well as prohibiting it from providing others with the means to make deceptive origin or certification claims about its products.
Takeaway: The settlement illustrates the importance of making accurate claims in the advertising and sale of products, in particular with regard to Made in the USA claims so that consumers are not deceived. We advise companies to ensure that they any claims they make, especially when they concern country of origin claims, are accurate. The FTC’s Enforcement Policy Statement on U.S. Origin claims and its Endorsement Guides provide further guidance for businesses on this topic.