An American company and its sister concern told people that products they marketed and sold during the pandemic were made in the United States. In truth, their personal protective equipment (PPE), including masks, gowns, and gloves, and materials to make them were almost entirely imported. They will have to pay penalties of $157,683.37, which is due immediately.
The charges: The US Federal Trade Commission (FTC) charged Adam J Harmon and his two companies, Axis LED Group, LLC and ALG-Health LLC, with violating the COVID-19 Consumer Protection Act, the Made in USA Labeling Rule and the FTC Act.
- The agency’s proposed order would stop them from making deceptive claims that products were Made in USA – or, that because they were Made in USA, they provided superior protection from COVID-19. The order also would require them to pay a civil penalty for their past deceptive claims.
The specific case: According to the charges framed by the FTC, the defendants specifically harmed consumers by:
- Deceiving consumers about the country of origin of their products. Through social media posts, marketing materials, and labels, the defendants claimed that their lighting and COVID-19 personal protective products were manufactured in the United States. In fact, the defendants’ products were almost entirely imported. The defendants’ conduct violated the FTC Act, the Covid-19 Consumer Protection Act, and the Made in the USA Labeling Rule.
- Deceiving consumers about the efficacy of their COVID-19 PPE products, the defendants claimed that their PPE products were superior due to their country of origin. These false claims deceived consumers and undermined honest competitors.
Enforcement Action: The proposed order settling the FTC’s complaint against Harmon, Axis LED Group, LLC, and ALG-Health LLC prohibits the conduct alleged in the complaint. Harmon and his companies must:
- Stop making deceptive U.S.-origin labelling and advertising claims. Harmon and his companies are prohibited from claiming that products are made in the United States unless they can (1) show that the product’s final assembly or processing – and all significant processing – takes 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, or (2) clearly and prominently qualify origin claims to disclose imported content or processing.
- Provide substantiation. The defendants must substantiate all Made in USA and COVID-19-related claims, and refrain from making misleading claims for any products or services they provide.
- Pay civil penalties. The defendants must pay a $157,683.37 civil penalty, which is due immediately. The defendants are also subject to a $2.8 million redress judgment, which is suspended due to their inability to pay. Should the FTC discover that the defendants have misstated the value of any assets or failed to disclose them, the agency will seek to have the suspension lifted and the full judgment due immediately.
FTC’s Made in USA Labeling Rule: Under the FTC’s Made in USA Labeling Rule, marketers making unqualified Made in USA claims on labels should be able to prove that their products are “all or virtually all” made in the United States. The rule also requires all “Made in USA” labels appearing in mail order catalogues and online to be truthful.