FTC Orders Apparel Company to Pay Six-Figure Fine for False Made-in-USA Claims
A Utah-based company that sells conservative-themed print clothing has falsely claimed its clothes are made in the US and now has to pay a six-figure fine and tell customers it lied about where its products were made.
Lions Not Sheep and its owner, Sean Whalen, must pay $211,335 to remove clothing tags and replace them with fake Made in USA tags, according to a recently finalized Federal Trade Commission (FTC) order.
The case is a potential cautionary tale for companies in the promotional products/apparel decoration industry who wish to make Made in USA claims on the items they sell.
In addition to paying the fine, Whalen and Lions Not Sheep must stop making false Made in USA claims and tell the truth about products made in China and other countries.
As part of this, Whalen/Lions Not Sheep must notify customers by mail or email that the products they purchased were not actually manufactured in the United States. In particular, the FTC ordered that Whalen and co. notify customers in writing that the FTC “has sued us for making false statements” and that “although we screen (print) or embroider products in the United States, many of the items we sell are imported.”
Lions Not Sheep sells its own line of decorated t-shirts, sweatshirts, jackets and sweaters on its website, as well as on Amazon and Etsy.
The company markets its products heavily through social media. The messaging graphics and themes — including anti-Joe Biden sentiments — are aimed at a right-wing audience. Owner Whalen is also an author, founder of business networking app Meetrz, business coach and speaker. His Instagram page has around 281,000 followers.
Authorities said Lion Not Sheep’s Made in USA claims online and on product labels: “Made in the USA”, “Made in America”, “Are your products made in the USA?” “100% AMERICAN MADE” and “BEST AMERICAN MADE EQUIPMENT ON THE PLANET”.
In most cases, according to the FTC, the products advertised with these claims were fully imported shirts and hats with limited finishing work done in the United States.
Companies cannot claim that products are made in the United States unless they can prove that the final assembly or processing of the product – and all significant processing – takes place here and that all or nearly all ingredients or components of the product are manufactured and purchased here.
Companies can do qualified Made in the United States claims, but must include a clear and conspicuous disclosure of the extent to which the product contains foreign parts, ingredients or components, or processing.
Also, claiming that a product is assembled in the United States, companies must ensure that it is ultimately substantially processed in the United States, that its primary assembly takes place in the United States, and that assembly operations in the United States are substantial. Promotional product professionals should note that in April, the FTC began enforcing new rules regarding claims that a product is made in the United States.