Source: Blog – Alliance for American Manufacturing

Getty Images

Tractor manufacturer Kubota North America will pay $2 million for falsely labeling some of its replacement parts as American-made, even though they were made entirely overseas.

Companies that claim to manufacture their products in America are on notice to refrain from falsely labeling their goods as “Made in USA” when they are in fact imported from overseas.

The Federal Trade Commission (FTC) was constrained for many years from imposing monetary penalties on companies that engaged in this deceptive practice. The FTC would often issue consent orders on violating companies that were a mere slap on the wrist and carried little weight.

But enforcement has changed for the better during the past three years.

The FTC continued its aggressive pursuit of companies that falsely label their products Made in America when it announced on Friday, Jan. 26 the largest civil penalty for Made in USA fraud against tractor manufacturer Kubota North America Corporation.

The FTC said Kubota will pay a $2 million penalty for falsely labeling some of its replacement parts “Made in USA” even though they were fully manufactured overseas. In addition to the penalty, Kubota will be prohibited from making deceptive claims, according to a court order filed by the U.S. Justice Department on the FTC’s behalf.

Kubota is the latest company in what is becoming an extensive list of businesses that have been fined by the FTC since the government agency put some teeth into its false-labeling decisions when it levied a $1 million against retailer Williams Sonoma in March 2020.

“Today’s settlement includes the largest civil penalty assessed for violating the Made in USA Labeling Rule,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection on Jan. 26. “The FTC will continue cracking down on deceptive Made in USA claims that cheat consumers and honest businesses.”

Dallas-based Kubota North America Corporation is a Japanese company that expanded its manufacturing of tractors, lawn mowers and construction equipment into the U.S. market in 1972.

And Kubota is a repeat offender when it comes to country of origin labeling fraud, as it had been cited by the FTC in 1999 for falsely claiming a line of its lawn tractors was made in the United States. That year, Kubota, along with five other companies – Stanley Works, American Honda Corporation, Johnson Worldwide Associates, Inc., USDrives Corporation and Rand International Leisure Products Ltd. – was named in an FTC complaint that determined the companies misrepresented that some of their products were made in the United States.

In each of these 1999 cases, consent settlement agreements were made with these manufacturers that prohibited these companies from misrepresenting the extent to which their products are manufactured in the United States.

That was it. No meaningful monetary penalties were assessed, which perhaps would have sent a more serious message that the U.S. would no longer tolerate the practice of false labeling.

These consent agreements were basically a warning to these violating companies and did not constitute admission of a law violation. So, it appears Kubota continued with its deceptive practices, perhaps because it didn’t feel the pain that a strong monetary penalty may have invoked.

But times have changed, as the FTC determined Kubota violated the 2021 Made in USA Labeling Rule by labeling “thousands of replacement parts for its tractors and other agricultural equipment as Made in USA, even though they were made entirely overseas.”

The company also moved manufacturing for some parts from the U.S. to other countries, but did not update the products’ labeling to reflect that change, the FTC said.

Another company that was previously cited with a consent agreement is Resident Home LLC. A repeat offender, Resident Home LLC and owner Ran Reske reached a monetary settlement of $753,000 in July 2023 to settle FTC charges they made false, misleading, or unsupported advertising claims that their imported DreamCloud mattresses were made from 100% USA-made materials.

The Alliance for American Manufacturing (AAM) has been a longtime advocate for stronger Made in USA enforcement, including by participating in a 2019 FTC workshop on the issue.

In 2021, the FTC approved the Made in USA Labeling Rule which finally established meaningful penalties for companies found to have purposely mislabeled imported products as “Made in USA.” At the passage of the rule, AAM President Scott Paul said:

“The ‘Made in USA’ label matters.

“U.S. consumers place great value in the label because of its embodiment of American values – including quality and knowing that their purchase will support American workers. In many cases, they are even willing to pay a premium for American-made.

“When wrongdoers making fraudulent claims go unpunished, it robs consumers of their spending dollars, and it hurts U.S. manufacturers who have invested in our nation. The Made in USA label isn’t a PR tool. It is a way to recognize the hard work and dedication required of American manufacturers and their employees who make their products in our local communities.

“The FTC’s application of more meaningful penalties for this egregious behavior is a victory for American manufacturers. It is especially timely as our nation emerges from the COVIC pandemic. Giving consumers confidence in the Made in USA label will encourage more companies to make their products here in America.”

AAM continues to applaud the FTC for its stepped-up enforcement of country-of-origin labeling. Hopefully, this will send the message that false Made in USA labeling will not go unnoticed and unpunished.

Full Article: Read More