The Federal Trade Commission (FTC) has started enforcing new rules related to claims that a product is American-made – a development worth taking note of for promotional products suppliers and distributors that aim to assert an item is produced domestically.

The FTC’s Made in USA Labeling Rule took effect in August 2021. It prohibits claims that a product was made in the United States unless final assembly or processing of the product occurs in the U.S., all significant processing that goes into the product occurs domestically, and all or virtually all ingredients or components of the product are made and sourced in the U.S.

While there have been rules on Made-in-USA assertions dating back decades, the Made in USA Labeling Rule codifies a broader range of remedies by the FTC, including the ability to seek redress, damages, penalties and other relief from those who lie about a Made in USA label. It enables the commission for the first time to seek civil penalties of up to $43,280 per violation of the rule.

Furthermore, the FTC appears to be looking to apply the rules – and potential penalties – to mediums beyond just product labels.

“To avoid liability under the rule and the civil penalties that result, companies should be sure that they are able to substantiate country-of-origin claims on any label or packaging or in any advertising or marketing materials in accordance with the three elements of the rule,” JD Supra, a legal intelligence source, reported. Those marketing materials would appear to include social media content and videos.

Filed in April, the FTC’s first enforcement action under the new rule came against Florida-based Lithionics Battery LLC, a company that designs and sells battery products for recreational vehicles, amusement park rides, marine applications and low-speed electric vehicles.

The FTC’s complaint alleged that, since at least 2018, Lithionics falsely labeled its battery products with an American flag image surrounded by the words “Made in U.S.A.,” often accompanied by the statement “Proudly Designed and Built in USA,” when these products were primarily made overseas.

The FTC further asserted that photographs of products bearing this label and other Made in USA claims appeared on the company website, on its social media accounts and in mail-order catalogs.

YouTube videos featured company Owner Steven Tartaglia and other employees printing Made in USA labels and putting them on Lithionics products. Lithionics allegedly published a chart in its marketing materials juxtaposing its own products with “imports,” and highlighting “advantage[s] of Lithionics battery systems” over imported competing products. Lithionics also misrepresented in mail-order catalogs that its products were made in the United States, the FTC said.

A proposed settlement would prohibit Lithionics from making misleading country-of-origin claims about its products and require the firm to pay civil penalties of $105,319.56.

The settlement, if approved, would also compel Lithionics to notify consumers who purchased its batteries from Aug. 13 to 30, 2021, that the products were “not all or virtually all ‘Made in USA.’”