Distributor of Pulley Block Systems Settles with FTC, Agrees to Drop Misleading ‘Made in USA’ Claims

A Texas-based distributor of pulley block systems will stop making misleading unqualified claims that its products  are made in the United States, under a settlement with the Federal Trade Commission.

In its complaint against Block Division, Inc., the FTC alleges that the company deceived consumers with false, misleading, and unsupported claims that its pulley blocks and other products are “Made in USA.”

According to the complaint, for a period of several years, Block Division’s pulleys featured imported steel plates that entered the United States from overseas already stamped “Made in USA.” The complaint also alleges that Block Division used unqualified “Made in USA” claims in advertising on its website, in stores, through trade shows and authorized dealers, on social media, and through flyers and pamphlets to represent that these pulley blocks, other products, and the parts used to make them, were all or virtually all made in the United States. In fact, the complaint states, Block Division’s pulley blocks and other products include significant imported parts, which are essential to the function of those products.

“Consumers have the right to know that they can trust companies to be truthful when it comes to ‘Made in USA’ claims,” said Acting FTC Chairman Maureen Ohlhausen. “This is an important issue for American business and their customers, and the FTC will remain vigilant in this area.” This is the FTC’s second Made in USA case in five weeks.

The stipulated final order prohibits Block Division from making unqualified “Made in USA” claims for any product unless it can show that the product’s final assembly or processing – and all significant processing – take 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. Under the order, any qualified Made in USA claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients, and/or processing.

Block Division also is prohibited from making any country-of-origin claims about its products unless the claims are true and not misleading, and unless the company has a reasonable basis for making them.

The Commission vote to issue the complaint and accept the proposed consent order was 2-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through April 7, 2017, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $40,654.

The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides further guidance on the Made in USA standard.