‘Built in Detroit’ and FTC Made in USA Rules

Is Shinola “Made in USA,” or do they fall outside the FTC’s scope? Shinola has publicly claimed that despite risking possible contradiction of Federal Trade Commission (“FTC”) regulations, they will continue to use “Built in Detroit” as their tagline on watches. The FTC requires that when a product claims that it is “Made in USA” or something similar, that “all, or virtually all” of the product has to fit that description. This policy is intended to prevent companies from misleading or deceiving consumers.

The FTC’s regulations state that a “Made in USA” claim can be done either expressly or by implied means. To expressly advertise their products, a company will use statements such as “Made in USA” or “Our products are American-made.” However, implied claims can include references to the United States flag, outlines of US maps, or reference to US locations of factories or headquarters. Essentially, the FTC is targeting any brand or tagline that could convey to consumers that the product is of US origin. Based on this metric, Shinola may fit under the ‘implied claims’ category of the regulations by referring to Detroit, their headquarters and manufacturing location in the United States.

The FTC‘s “all, or virtually all” requirement means that all significant parts and processing elements involved in the creation of a product must be of US origin. In other words, any parts or processing completed outside of the United States must be negligible to the overall product made. The FTC goes on to say that final assembly and processing of the good must take place in the United States. Additionally, the Commission will consider manufacturing costs assigned to the US portions and foreign portions of the product and how far removed the foreign product is from the final item.

In Shinola’s case, the watch movements, dials, hands and crystals are all foreign products. While the cost of these parts may be minimal in comparison to the manufacturing costs in the United States, these are key components to a watch. After all, without a watch movement and hands, you don’t have much of a watch.

The FTC’s Made in USA Standard: Legal Framework

The FTC’s authority over “Made in USA” claims derives from Section 5 of the FTC Act, 15 U.S.C. § 45, which prohibits unfair or deceptive acts or practices in commerce. The Commission’s enforcement policy for “Made in USA” claims is set out in the FTC’s Enforcement Policy Statement on U.S.-Origin Claims. The FTC does not have a specific regulation with statutory force governing these claims — instead, enforcement proceeds on a case-by-case basis under the deception standard of Section 5.

The “all, or virtually all” standard for unqualified “Made in USA” claims reflects the FTC’s view of consumer expectations: most American consumers who see an unqualified “Made in USA” claim on a product believe that essentially all of the product was made in the United States. The Commission evaluates claims based on what a significant minority of consumers would understand the representation to mean.

Qualified vs. Unqualified Claims

The FTC’s framework distinguishes between unqualified and qualified “Made in USA” claims:

Unqualified Claims

An unqualified claim — “Made in USA,” “American-made,” or a statement with no caveats about foreign content — is only permissible when all significant parts, processing, and labor contributing to the product are of U.S. origin. The FTC evaluates four factors: (1) the proportion of total manufacturing costs attributable to U.S. parts and processing; (2) how far removed any foreign content is from the finished product; (3) the significance of the foreign components to the overall product; and (4) consumer understanding of what the claim means in the specific product category.

Qualified Claims

A qualified claim accurately discloses the extent of domestic content or manufacture. Examples include: “Made in USA of imported parts,” “Assembled in USA,” or “60% U.S. content.” These claims are permissible when they accurately reflect the product’s origin and do not convey the impression that the product is wholly domestic. The FTC requires that qualifying language be clear, prominent, and in close proximity to the U.S.-origin claim.

Implied Claims

Implied claims are treated as strictly as express claims. The FTC has found violations in cases where domestic imagery — American flags, bald eagles, maps of the United States, and references to domestic cities or regions — was used in advertising in a way that conveys a U.S.-origin message for products with significant foreign content. The Shinola “Built in Detroit” example illustrates this principle: referring to a specific U.S. city in connection with manufacturing implies domestic origin even without using the words “Made in USA.”

The 2021 FTC Rule: Updated Enforcement

In July 2021, the FTC finalized a formal “Made in USA” Labeling Rule (16 C.F.R. Part 323), which codified the Commission’s longstanding enforcement policy and — for the first time — gave the FTC authority to seek civil penalties for violations. Under the 2021 rule, a manufacturer or marketer who makes an unqualified “Made in USA” claim on a label without meeting the “all, or virtually all” standard can face civil monetary penalties of up to $50,120 per violation. The rule applies to labels on products, not to advertising claims, which remain governed by the FTC’s enforcement policy statement.

The 2021 rule also introduced a “Assembled in USA” label standard: a product can be labeled “Assembled in USA” only if its principal assembly takes place in the U.S., the assembly is substantial, and the assembly must transform the product in some meaningful way. This codification addressed a category of products that were marketed as “assembled” domestically but were largely manufactured abroad.

FTC Enforcement Actions: Real Consequences

The FTC has pursued numerous enforcement actions against companies making false or misleading “Made in USA” claims. Recent cases include:

• Nectar Sleep (2022): The FTC brought its first “Made in USA” labeling rule enforcement action against Nectar Sleep and its parent company for labeling mattresses as “Made in USA” when they were manufactured in China. The company settled for $753,000 in civil penalties and agreed to stop making unqualified domestic-origin claims.
• Williams-Sonoma (2020): The FTC settled with Williams-Sonoma for $1 million over false “Made in USA” claims for bedding products manufactured in India and Pakistan. The case involved both the retailer’s own representations and third-party products sold on its platform under domestic-origin claims.
• Patriot Puck (2019): A hockey puck manufacturer settled FTC charges for claiming its products were “Made in USA” when they were manufactured in China. The settlement required the company to stop making the claims and to notify retailers of the misrepresentation.

Practical Guidance for Businesses

Companies considering a domestic-origin marketing strategy should conduct a thorough analysis of their supply chain before making any Made in USA claim. Key steps include:

• Map the supply chain for each product, identifying the source of every significant part and material;
• Calculate the proportion of manufacturing cost attributable to domestic vs. foreign content;
• Evaluate whether any foreign components are “significant” to the product’s function or identity;
• Determine whether an unqualified claim is supportable or whether a qualified claim is more appropriate; and
• Review all advertising, packaging, and marketing materials — including imagery — for implied domestic-origin representations.

Contact Revision Legal About FTC Compliance

If you have questions about FTC advertising compliance, “Made in USA” labeling, or supply chain origin claims, Revision Legal’s attorneys can help you evaluate your marketing practices and minimize enforcement risk. Contact us at 855-473-8474 or complete the contact form on this page.