Just in time for July 4, the Federal Trade Commission (FTC) has announced its first-ever celebration of Made in USA (MUSA) Month. We love a themed initiative. Let the fireworks begin. 

What can businesses expect?

Education and outreach. Because of the politics that underlie MUSA enforcement, business education is likely to be this month’s primary focus. The standard for making an unqualified MUSA claim – that is, a claim that a product is “made,” “built,” “manufactured,” etc., in the United States with no reference to imported parts – is well settled. For more than 80 years, the FTC has consistently said consumers expect products advertised as MUSA to be “all or virtually all” made in the United States, all the way back to raw materials. That means marketers should be prepared to demonstrate products have no more than a de minimis amount of foreign content.

But, although it comports with consumer expectations, the “all or virtually all” standard is unattainable for most products, including those that include parts or materials that can’t be sourced in the United States. So, the agency needs to take a light touch. Overenforcement may deter honest companies from investing in U.S. operations if the risk of regulatory challenge starts to outweigh the benefit of promoting U.S. manufacturing functions. In the past, education through outreach and informal staff counseling has proven the best way to boost compliance without chilling truthful claims. It’s likely that MUSA Month will focus on these efforts.

Stepped-up enforcement. As expected, Chairman Andrew Ferguson’s kick-off proclamation highlights business education, but MUSA Month would be an underwhelming initiative without some sort of enforcement announcement. A case may be in the works, but it’s also possible the agency is planning to send warning letters to companies that may be violating the FTC Act or the MUSA Labeling Rule, 16 CFR Part 323. 

Warning letters are an easy, splashy way to let the public know the FTC is #DoingSomething when the agency needs a fast result it can’t accomplish through formal enforcement action because of timing or other constraints. The related press releases – issued as soon as the letters go out – efficiently inform the public that the agency is on the beat and place companies on notice of potential issues. Often, the agency takes the “W” with a press release and that’s the end of it. But if warned companies refuse to fall in line, the agency may back up letters with eventual enforcement action. So, businesses should take warning letters seriously and make any necessary changes.

In the background, the agency also may be initiating investigations by issuing voluntary access letters or compulsory process (civil investigative demands, referred to as CIDs) to take a deeper look at possible violations. But if that’s happening, we won’t hear about it unless and until the agency takes some formal action because the FTC generally can’t disclose ongoing investigations to the public.

What should businesses do to prepare?

Brush up on compliance. Take the FTC’s MUSA celebration as a sign it’s time for a full compliance check. Particularly if you’ve had supply chain fluctuations over the past year, make sure your claims are accurate and substantiated. For detailed information on how the agency analyzes the “all or virtually all” standard and other tips, check out my recent compliance article in Corporate Counsel magazine or last year’s post announcing the updated MUSA compliance guide.

Respond to agency inquiries. If your business gets a warning letter, access letter, or CID, be sure to make contact with the agency right away. The FTC staff often will work with businesses to get the information the agency needs without grinding business operations to a halt. For example, the staff may agree to narrow the scope of a request or receive information on a rolling schedule. But that won’t happen if you don’t open the lines of communication.

Call for help. As the longtime manager of the FTC’s MUSA compliance program, I can help your business navigate investigations or other concerns. If you have questions, reach out to me or your usual Reed Smith contact.