Product Results - R.L. Hammette & Associates

What Does It Mean To Be Made in the USA

As the FTC cracks down on bogus claims, this Q&A primer helps clarify what’s kosher and what’s not regarding domestic origin labeling and marketing of products.

Williams-Sonoma notched a record-breaker, but for all the wrong reasons.

In April, the Federal Trade Commission (FTC) slapped the retailer of kitchenware and home furnishings with what is reportedly the largest ever civil penalty related to alleged false Made-in-the-USA claims – $3.175 million.

The FTC determined that Williams-Sonoma had been advertising certain products as American-made when in fact they were manufactured in China and other countries, all in violation of a 2020 FTC order tied to earlier allegedly fraudulent U.S.-origin claims by the company.

The federal chastening followed fast after a case that had marked an all-time record for a civil penalty stemming from reportedly bogus USA-made labeling. In January 2024, Kubota North America Corporation agreed to pay a $2 million fine for labeling replacement parts for tractors and other agricultural equipment as Made in the USA, even though they were produced overseas.

The recent cases highlight that the FTC is pressing enforcement of rules regarding Made-in-the-USA assertions – a reality about which companies in the promotional products industry would be wise to take heed. Clearly, violating rules can result in sizable civil penalties and other headaches – such as having to submit annual compliance certifications to the FTC, as Williams-Sonoma must now do.

$3.175 million - The record-setting civil penalty Williams-Sonoma was ordered to pay for alleged false Made-in-the-USA claims on some of its products.

(FTC)

Some promo leaders ASI Media spoke with maintain that mislabeling or incorrectly advertising products as American-made, when in fact the items don’t meet the standard to be designated as such, is a problem in many industries, including the merch market.

“It’s an issue across our industry,” shares an executive at a Top 40 supplier who wished to remain anonymous.

Whether done as willful deception or out of ignorance, such false claims ultimately deceive would-be buyers and give the product purveyors an unfair advantage in a domestic marketplace in which end-clients often would prefer to purchase American-produced products, provided the price is right, critics say.

But just what does it mean to be Made in the USA? What standards must be met? What’s a qualified claim? And is there a difference between Made in the USA and Assembled in the USA? While not a substitute for legal advice, this ASI Media Q&A primer helps answer those questions.

Q: When can a product be labeled/marketed as“Made in the USA” under federal rules?

A: For a product to be called Made in the USA, or to claim tobe of domestic origin without qualifications or limits on theclaim, it must be “all or virtually all” made in the United States.This means the final assembly or processing of the productoccurs in the U.S., all significant processing that goes into theproduct happens here and all or virtually all ingredients orcomponents of the product are made and sourceddomestically. “The product should contain no – or negligible –foreign content,” says Mitchell J. Katz, a senior public affairsspecialist at the FTC.

Federal rules on Made in the USA apply to claims on productsthemselves and labeling, as well as in advertising andmarketing materials, including digital platforms like web-based ads, emails, social media and online productdescriptions.

Heads Up: The FTC says that manufacturers and marketersshould not indicate, either expressly or implicitly, that a wholeproduct line is of U.S. origin when only some products in thecollection are produced domestically.

Q: How does the FTC determine if the “all orvirtually all” standard is met when it comes toproduct parts?

A: Katz says there’s no “bright-line percentage” of a product’singredients/components that the FTC says must beproduced/sourced domestically for an item to be calledMade in the USA. Rather, the FTC considers elements like howmuch of a product’s total manufacturing costs can beassigned to U.S. parts and processing, how far removed anyforeign content is from the finished product and howimportant a role internationally produced components are toa product’s form or function.

Things can get tricky, and sometimes, the form or functionfactors supersede cost in relevance to the FTC assessment.

The FTC gives an example in which a watch is produced in theU.S. with American labor and mostly U.S. parts, but thecompany uses foreign-origin movement components in thewatches. The movements may not be a big percentage of theproduct’s production cost, but without them, the watcheswon’t work. “Because movements are essential to thewatches’ function, an unqualified Made in USA claim is likelydeceptive,” the FTC says.

$211,335 - The penalty a Utah-based apparel company, Lions Not Sheep, had to pay for allegedly removing clothing tags andreplacing them with phony Made-in-the-USAlabels, according to a 2022 order from theFederal Trade Commission.

Q: Is FTC approval required to market as Made inthe USA?

A: A company doesn’t need approval from the FTC beforemaking a Made-in-the-USA claim, and the FTC doesn’tpreapprove advertising or labeling claims. Still, thecommission advises manufacturers and marketers to beprepared to substantiate their U.S.-made assertions based onreasonable evidence that shows a product truly meets the“all or virtually all” standard.

The FTC says that, if given in good faith, manufacturers andmarketers can rely on information from vendor partnersabout the domestic content in the parts, components andother elements they produce and advertise. “Rather thanassume the input is 100% U.S.-made, however, manufacturersand marketers would be wise to ask the supplier for specificinformation about the percentage of U.S. content before theymake a U.S. origin claim,” the FTC states.

Q: What’s a qualified claim?

A: “Made in the USA From Chinese Parts.” “Designed in USA & Manufactured in Thailand.” “80% U.S. Content.”

These are examples of qualified claims – assertions onproducts, labels and in marketing/advertising/descriptionsthat share the extent, amount or type of a product’s domesticcontent or processing. They indicate a product isn’tcompletely of domestic origin, as would be the case with anunqualified claim of simply “Made in the USA.”

A qualified claim must feature a verifiable, clear andconspicuous disclosure about the extent to which the productcontains foreign parts, processing and/or ingredients orcomponents.

“Qualified USA claims are becoming more popular,” sharesSierra. “It’s because American customers want to see a USAconnection to the product, but companies don’t want toviolate the FTC’s guidelines.”

Even so, manufacturers and marketers can still run afoul ofregulators with qualified claims and must tread carefully toavoid stating or implying more domestic content orproduction than was actually used to produce a product.

“Avoid qualified claims unless the product has a significantamount of U.S. content or U.S. processing,” the FTC advises. “Aqualified Made in USA claim, like an unqualified claim, mustbe truthful and substantiated.”

Heads Up: It may be smart to avoid using a term like “Created inthe USA,” unless a product meets the criteria for an unqualifiedMade-in-the-USA assertion. Say, for instance, a new tote bag isdesigned in Colorado but then actually produced in India. Callingthis product “Created in the USA” would likely be considereddeceptive by the FTC, as commission officials may concludethere’s a high likelihood that consumers would equate “created”with “made,” which indicates domestic manufacturing fromlargely domestic components. A qualified claim like “Designed in USA & Manufactured in India” would probably be moreappropriate.

Q: Is there a difference between “Made in the USA” and “Assembled in the USA”?

A: Yes, though it’s often misunderstood, experts say. “A lot ofpeople think these claims mean the same thing, but they’rerelaying different information,” Sierra shares.

A product can be called Made in the USA without qualificationwhen it meets the domestic production and the “all orvirtually all” product component criteria. In laymen’s terms,Assembled in the USA means that a product contains ahigher degree of foreign components but that its primaryassembly occurs within the United States and that thisassembly is substantial.

Again, the devil is often in the details.

An FTC example: Say a lawn mower composed of mostlydomestic parts, except for the cable sheathing, flywheel,wheel rims and air filter, is built in the U.S. It’s copacetic to callthat product Assembled in the USA, the FTC says. However,take a computer in which all the major components aremade overseas but then cobbled together domestically –that’s a case in which an unqualified Assembled-in-the-USAclaim would likely be deceptive because the parts areprimarily foreign and because stateside assembly wasn’tsubstantial, according to the FTC.

“A simple ‘screwdriver’ assembly in the U.S. of foreigncomponents into a final product at the end of themanufacturing process doesn’t usually qualify for theAssembled in USA claim,” the FTC states.

Heads Up: Due to certain laws, U.S. content must be disclosed onproducts such as automobiles, textiles, wool and fur items. Still,there’s no law that requires most other products sold in the U.S. tobe marked or labeled Made in the USA or have any otherdisclosure about their amount of U.S. content. It’s up tocompanies if they want to share such information.

Q: How can promo get better on Made-in-the-USAclaims?

A: For starters, suppliers, distributors and end-buyers can digdeeper into educating themselves about the various types ofUSA-made claims, what they mean and where they can beapplied by studying the FTC guidelines.

Further, suppliers should have a dedicated compliancemanager/legal expert review Made-in-the-USA assertions,including qualified claims and “assembled-in” claims, beforeputting them on products, labels or in marketing/advertising.

Greater transparency, backed by good documentation, andimproved distributor due diligence could help, too.

Outstanding Awards and Plaques

Recognition ceremonies are critical for motivating students, athletes and employees.

Construction is a demanding job, and that means recognition is imperative. According to recent end-buyer market data from ASI Research, awards and trophies are in the top three promo categories for the construction sector. Consider personalized awards and trophies to congratulate workers for quality work and shining safety records.

award

Year-end recognition ceremonies are well-suited for this glass award with a walnut base. Both the glass and base can be engraved.

award

Members of dance and gymnastics teams can be rewarded for a job well done with this sublimated award ribbon. Available in a variety of colors, the message can be either silkscreened or hot stamped.

award

This shadow box is specially designed to display a police badge to recognize excellence and community service. Features double-beveled gallery matting and a personalized mounted plate.

award

This satin podium banner is perfect for recognizing hardworking athletes and sales reps. Features a full-color digital imprint.

award

This years-of-service award made of striking optical crystal is a must for companies with long-tenured staff. Features a deep etch imprint.

award

Government clients will appreciate this eagle award to recognize service to the community.

award

This bamboo plaque is well-suited for eco-conscious organizations. Can be displayed horizontally or vertically and comes in a variety of sizes.

The Rise and Fall (and Rise Again) of Fidget Toys

More than just a fad, fidget-forward products are growing in popularity and functionality, with “pop-it” balls and spinner pens taking promo by storm.

At the height of the “pop fidget” craze of the COVID-19 pandemic, supplier High Caliber Line fulfilled an order of 400,000 poppers – a fidget toy made with silicone bumps that can be pushed in and out like never-ending Bubble Wrap – for a national drugstore chain.

“Kids are nervous when they go to these places,” says CEO and Founder Dan Oas. “They want to give them things to play with to keep their mind off things, particularly getting a shot.”

But it’s not just children who need a way to relieve the stresses of everyday life.

The prevalence of anxiety and depression symptoms skyrocketed during the pandemic, and even today, twice as many people in the U.S. are experiencing mental health symptoms compared to 2019, according to research from the Centers for Disease Control and Prevention.

Accordingly, the demand for fidget toys – which have long been associated with aiding focus and easing anxiety – has spiked in the promo industry, reaching more than triple its 2018 popularity last year, based on ASI’s ESP search data. And they don’t seem to be going anywhere anytime soon.

“It initially started as a fun little novelty toy, and now it’s grown into something much bigger in regards to an awareness amongst society, and that’s what’s supporting it and feeding it,” says Brent Elenowitz of NY-based supplier Lincoln Line. “I think it’s just going to grow from here on out.”

Last year’s ESP data for terms related to fidget toys showed searches more than three times greater than similar searches in 2018 – including the potential return of the fidget spinner.

When Fidget Spinners Were King

Just about everyone in promo remembers 2017 as the year of the fidget spinner.

The 3-inch toy spun to the top of the ESP search charts during its peak in summer 2017, staying in the top five from April to August of that year before ultimately being named ASI’s 2018 product of the year. But after the initial craze, many suppliers were left with excess inventory because of the dramatic drop-off in demand, Oas says.

The data reflects this lackluster interest among buyers, with ESP searches for fidget-related terms slowing and then plummeting to their lowest levels in 2020.

But “fidget” jumped back into the top 100 search terms in late 2021, which reflected both a resurgence of fidget toys in general and the next big thing in the fidget world: the pop fidget. ESP searches for the pop fidget skyrocketed by almost 30,000% between 2020 and 2021.

Popper Ball

While searches for poppers have slowed since their height in 2021 and 2022, they’ve maintained a longevity that the fidget spinner didn’t quite manage, Oas says. Part of that has come from suppliers transforming the product from its original flat shape into other forms, like the pop-it ball, or key chains featuring a few “poppable” bubbles.

“We just kind of keep doing more and keep adding different things,” Oas says. “The popper ball was really popular – that was a big winner last year.”

But suppliers say they’re noticing increases in fidget spinner sales as well. Lincoln Line is selling out its standard spinners left and right, Elenowitz says. ESP searches for fidget spinners almost doubled between 2022 and 2023, and the search term has remained in the top 100 search terms every month of 2024 so far.

Popper Notebook

“They’re things to keep you occupied so that you can take that energy, put it into there and then maybe focus your mental energy into whatever it is that’s going on,” Elenowitz says. “And I think that’s how these things help people.”

Are Functional Fidgets the Future?

A rising star in the world of fidget products might be the fidget pen, which has a spinnable piece near the top that users can play with while working or writing. Searches for fidget pens – or spinner pens, as they’re often known – shot up 600% between 2022 and 2023, with levels in 2024 set to outpace that.

Estimates based on ESP search data so far in 2024 suggest that fidget spinners and fidget pens may be on the rise this year.

Counselor Top 40 supplier SnugZ USA launched a spinner version of its Curvaceous Pen last year after a manufacturer suggestion, and it’s consistently sold in the top 10 of the company’s writing instruments every month since, says Brandon Brown, vice president of marketing.

Spin-It Stylus Pen

When SnugZ started giving out the spinner pens at the office or to distributors at trade shows, recipients were “fidgeting with them without even knowing they were fidgeting,” Brown says.

“We knew we had a hit,” he adds.

The increase in sales of the fidget pen is reflective of a larger trend in the fidget – and promo – market toward functional items, rather than just another “thing,” Oas says. That extends to other products, like the Iconic Pop Fidget Bottle from Elemental Bottles, which features a pop-it strap as a handle.

Water bottle with popper strap

Elemental Bottles launched the product in 2022, when the popper craze was still at its height, says Seth Inyang, co-founder of the supplier. The target market was kids, with a 14-ounce bottle, but Elemental soon had distributors and retailers alike asking for the product in larger sizes to keep up with demand.

“Turning it into a functional piece took it away from just being the fad,” Inyang says. “Nobody’s buying fidget pop by itself unless it’s been reinvented into something, but they’re buying more and more of the water bottle to this day.”

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What Does It Mean To Be Made in the USA

$3.175 million - The record-setting civil penalty Williams-Sonoma was ordered to pay for alleged false Made-in-the-USA claims on some of its products.

$211,335 - The penalty a Utah-based apparel company, Lions Not Sheep, had to pay for allegedly removing clothing tags andreplacing them with phony Made-in-the-USAlabels, according to a 2022 order from theFederal Trade Commission.

Outstanding Awards and Plaques

The Rise and Fall (and Rise Again) of Fidget Toys

When Fidget Spinners Were King

Are Functional Fidgets the Future?

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