The Federal Trade Commission (FTC) sued Electrowarmth Products LLC and its owner, Daniel W. Grindle, on Tuesday, alleging they deceptively claimed the heated fabric mattress pads they sell for truck bunks were made in the USA.
The FTC charged Grindle and Electrowarmth with violating the Textile Act and the Federal Trade Commission Act. The agency’s proposed order would stop Grindle and Electrowarmth from deceptively claiming that products were Made in USA, when in fact they were made in China.
“America’s hardworking truckers shouldn’t have to maneuver around marketers preying on their patriotism,” said Samuel Levine, director of the Bureau of Consumer Protection. “Electrowarmth’s false claims that its goods were made in the USA can also harm competitors who tell the truth about product origin.”
Based in Ohio, Grindle and Electrowarmth sell mattress pads of varying sizes, with wires and thermostats that provide heat, the FTC noted. According to the complaint, prior to 2019, Electrowarmth used U.S.-made textiles for mattress pads intended for use in truck bunks. But then in what the FTC said was a cost-cutting move, Grindle and Electrowarmth decided to move production to China and stop using U.S.-made textiles, while continuing to market their heated trunk bunk mattress pads as “Made in USA,” “Made in the USA since 1939” and “made-in-America products.”
The complaint alleges that Grindle instructed the Chinese manufacturer to make and package Electrowarmth’s products “exactly the same” as they were when previously manufactured in the United States.
According to the complaint, Grindle and Electrowarmth violated the Textile Act and the Federal Trade Commission Act by labeling and advertising the origin of the textiles used in their products as the United States, when these textile fiber products were wholly imported from China.
The complaint alleges that the defendants harmed consumers by failing to accurately label imported products with the country of origin, and Grindle and Electrowarmth deceived consumers by failing to correctly label the country of origin of their mattress pads.
Falsely advertising imported products as “Made in the USA.” Grindle and Electrowarmth labeled their mattress pads as being Made in the USA even though they were entirely made in China, the FTC charged.
The proposed order settling the FTC’s complaint against Grindle and Electrowarmth prohibits the conduct alleged in the complaint. Under the order, Grindle and Electrowarmth are prohibited from making unqualified U.S.-origin claims for any product unless they can show that the product’s final assembly or processing, and all significant processing, takes 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.
They must also include in any qualified Made in USA claims a “clear and conspicuous disclosure” about the extent to which the product contains foreign parts, ingredients or components, or processing, and must ensure, when claiming a product is assembled in the United States, that it is last substantially transformed in the United States, its principal assembly takes place in the United States and U.S. assembly operations are substantial.
The order prohibits Grindle and Electrowarmth from making any country-of-origin claim about a product or service unless the claim is not misleading and they have a reasonable basis that substantiates their claim. It also requires Grindle and Electrowarmth to make certain disclosures about the country of origin of any product subject to the Textile Fiber Products Identification Act and to provide compliance reports.
The order imposes an $815,809 monetary judgment, which is fully suspended due to Grindle’s and Electrowarmth’s inability to pay. If the FTC concludes that the respondents misrepresented or omitted any material aspect of their sworn financial statements, the amount of the entire monetary judgement will immediately become due.
Electrowarmth did not respond to a request for comment from Sourcing Journal.
The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides further guidance on making non-deceptive “Made in USA” claims. The agency’s Made in USA page features cases, instructive closing letters and the brochure “Complying with the Made in USA Standard,” which answers many of the questions companies ask. The FTC’s Made in USA Labeling Rule went into effect on Aug. 13, 2021. Companies that violate the rule from that date forward may be subject to civil penalties. “Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts” provides further information on labeling textile products.
The FTC vote to issue the complaint and accept the proposed consent order for public comment was 5-0.