lawsuits | Apr 30, 2024 |
Williams-Sonoma fined $3.2 million over false ‘Made in USA’ claims

In a historic settlement, the Federal Trade Commission has ordered Williams-Sonoma Inc. to pay almost $3.2 million for falsely claiming products were “Made in USA.” Additionally, moving forward, WSI will have to submit evidence annually that supports any future claims that its products are made in America.

The fine marks the homewares giant’s second regulatory violation as it pertains to the FTC, which also sued Williams-Sonoma in 2020 for advertising multiple furniture and bakeware products across its family of brands—including Goldtouch, Rejuvenation, Pottery Barn Teen and Pottery Barn Kids—as being all or virtually all made in the United States when they were not. At the time, the company received a $1 million fine and agreed to an FTC order requiring accurate product descriptions moving forward.

Under FTC’s Made in USA Standard, products must be all or virtually all made in America, with only a negligible portion of the components or manufacturing processes taking place in other countries; the product’s final processing or assembly must take place in the U.S. to warrant the designation. The standard was established in December 1997, and manufacturers are required to have evidence at the ready to back up their claims. Part of WSI’s 2020 order mandated that any of the company’s qualified Made in USA claims—where the product includes components sourced abroad—must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, components or processing. The company was ordered to comply with FTC standards around claiming a product is made in the United States, including ensuring 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 latest investigation and resulting lawsuit, filed April 22, came from a tip from consumer protection nonprofit Truth In Advertising Inc. The FTC’s complaint claims that the company continued to make deceptive statements about the origins of its products, and that several—specifically a mattress pad sold through Pottery Barn Teen—were labeled “Made in USA” despite being produced in China. The agency also found six products that were either made outside the U.S. or made primarily of imported materials.

In a first of its kind action surrounding Made in USA claims, the latest FTC order against Williams-Sonoma requires the company to submit annual certifications confirming it has implemented controls sufficient to ensure compliance with the order and isn’t aware of any material noncompliance not already corrected or disclosed to the FTC. The new provision also reiterates that the company cannot claim that a product was made in America unless the final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and almost entirely of ingredients or components of the product are made and sourced in the United States—and, more importantly, Williams-Sonoma is now required to show proof for any of its Made in USA claims on an annual basis.

Williams-Sonoma has not commented on the false claims lawsuit at this time. The company’s net revenue in 2023 was $7.7 billion.

“Americans expect that ‘Made in USA’ means what it says,” said FTC chair Lina M. Khan in a statement. “This action helps ensure that, when the claim is made by honest businesses, it retains its enormously valuable meaning to American consumers.”

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