May 7, 2023
The Value “Made in USA” Claims
FTC v. Cycra
A classic example of such a market segment includes consumers (mostly guys) who ride and follow content and competitions involving motocross, motorcycle, and all-terrain vehicles.
In April 2023, the FTC announced its largest fine ever in a proposed consent order with Cycra, Inc., claiming that Cycra and its COO, Steven Chadwick James violated the FTC Act and the FTC's Made in USA Labeling Rule.
To settle the FTC's enforcement action, Cycra agreed to injunctive provisions and a monetary judgment (fine) in the amount of $872,577, which was partially suspended for inability to pay.
What does the USA labeling rule require for digital marketing compliance?
The Made in USA Labeling Rule prohibits the use of the label "Made in the USA" unless:
- “The final assembly or processing of the product occurs in the United States,”
- “All significant processing that goes into the product occurs in the United States,” and
- “All or virtually all ingredients or components of the product are made and sourced in the United States.”
Cycra went all-in on its Made in the USA claims.
- Cycra's website claimed the products were "Proudly designed, developed, and manufactured in Lexington, North Carolina."
- Cycra's Instagram and Facebook pages referred to items as “proudly made in the USA” and “Made in the USA.” and
- Cycra labeled more than 150 products with the words “Made in the USA,” which often contained an American flag image.
Cycra's violations included the importation of finished products packaged with the Made in USA labels and product shipments from Taiwan that were packaged with Made in USA labels after receiving notice from U.S. Customs officials that the origin labels were false.
The FTC reports that the number of Made in USA cases is increasing.
For this reason, the FTC has elevated Made in USA claims as an enforcement action priority.