The Federal Trade Commission is taking actionagainst Florida-based EXOTOUSA LLC. (d/b/a Old Southern Brass) for falsely claiming that certain company products were manufactured in the U.S, and that the company was veteran-operated and donated 10 percent of its sales to military service charities.
The FTC’s proposed order would stop the company and its owner, Austin Oliver, from making these deceptive claims and require them to pay a monetary judgment.
“This company and its owner’s brazen deception cheated consumers who wanted to support U.S. manufacturing, veteran-operated businesses, and veteran charities,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue to hold accountable those who profit from false Made in USA and military association claims.”
According to the FTC’s complaint, Old Southern Brass made many claims on its website and advertising that the products it sold were made in the United States, including one post featuring “ ‘Merica Gifts for the ‘Merica Man In Your Life” that said “… all of our products are 100% American made, and nothing says ‘Merica like making products right here at home for ‘Merica man or woman alike.”
The complaint charges that, in spite of such claims, many of the company’s products were wholly imported from China or contained significant imported content.
In addition, the complaint points to numerous instances when Old Southern Brass claimed affiliation with the U.S. military, including that the company was veteran-operated, donated 10 percent of sales to military service charities, and that it sold products that included bullets or casings used by the U.S. military.
One post on the company’s website said “… as a veteran-operated business in the United States, our mission is to give back to fellow American patriots who have served and protected our country.”
A product listing on the company’s website advertised an engraved 50 caliber casing bottle opener as being “Handcrafted from an authentic 50 cal casing that was previously used by the U.S. military.”
Despite the company’s claims, the company was not operated by a veteran, and the products it sold as being used by the U.S. military were not actually used by the U.S. military. The complaint also charged that the company did not donate 10 percent of sales to veterans’ charities as it claimed. In fact, the company claimed charitable deductions that amounted to less than one-half of 1 percent of sales.
The FTC’s proposed order against the company and Oliver, which they have agreed to, prohibits them from making any false or misleading claims, including any about affiliation with or support of the U.S. military or veterans. It also requires that $150,000 must be turned over to the FTC.
The order also includes a number of requirements about the claims they make about the origin of their products:
- Restriction on unqualified claims: The company and Oliver will be 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 U.S.
- Requirement for qualified claims: The company and Oliver are required to include in any qualifiedMade in USA claims a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing.
- Requirement for assembly claims: The company and Oliver must also ensure, when claiming a product is assembled in the U.S., that it is last substantially transformed in the U.S., its principal assembly takes place in the U.S., and U.S. assembly operations are substantial.
The order includes a monetary judgment of $4,572,137.66, which is partially suspended due to the defendants’ inability to pay the full amount. If the Commission finds that the defendants lied about their financial status, the full amount of the judgment could become immediately payable.
The Commission vote to issue the administrative complaint and to accept the consent agreement was 3-0.
The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment, after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments appear in the published notice on regulations.gov.
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 $50,120.
The lead staff attorney on this matter was Julia Solomon Ensor in the Bureau of Consumer Protection.
The FTC is committed to ensuring that “Made in USA” claims are truthful. The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides guidance on making non-deceptive “Made in USA” claims. In addition, 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.
Source: Federal Trade Commissions
