Antitrust Law Daily Williams-Sonoma to pay $1M to settle FTC ‘Made in USA’ allegations
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Monday, March 30, 2020

Williams-Sonoma to pay $1M to settle FTC ‘Made in USA’ allegations

By Jeffrey May, J.D.

Settlement follows the agency’s decision to close an earlier investigation after the specialty retailer committed to a verification process to prevent deceptive country-of-origin claims.

Retailer Williams-Sonoma, Inc., whose brands include Pottery Barn and Rejuvenation, has agreed to settle FTC charges that it misrepresented that all of its signature bakeware line, its Rejuvenation-branded products, and Pottery Barn Teen and Pottery Barn Kids-branded upholstered furniture products are all or virtually all made in the United States. The company has agreed under the terms of a proposed consent order to refrain from making any country-of-origin claim about a product or service unless the claim is true, not misleading, and Williams-Sonoma has a reasonable basis substantiating the representation. The proposed settlement also includes a $1 million financial judgment (In the Matter of Williams-Sonoma, Inc., FTC File No. 202 3025).

It appears that the FTC is taking a harder line in this case than it has in other "Made in USA" matters because the misrepresentations allegedly continued after the company committed to a verification process to prevent deceptive country-of-origin claims. As the agency often does, it issued a closing letter in 2018 ending its investigation into potentially deceptive U.S.-origin claims on the pbteen.com website for apparently imported mattress pads after the company corrected country-of-origin information and agreed to comply with agency requirements. In the complaint announced today, the FTC alleged that "despite Williams-Sonoma’s statements leading to the staff’s closing letter, Respondent continued to disseminate advertisements and promotional materials, including through its website and social media platforms, which deceptively claimed certain categories of Williams-Sonoma products were all or virtually all made in the United States."

In a blog post, an FTC attorney warned that it is unwise to put ongoing compliance on the back burner if your company has made misleading "Made in USA" claims and represents that the inaccuracies have been corrected. "If you have reason to believe your country-of-origin claims are suspect, act quickly to correct the problem and follow through with vigilance to ensure it doesn’t happen again," Fair added.

The FTC alleges that Williams-Sonoma deceived consumers with broad claims that all items in the Goldtouch Bakeware line, Rejuvenation-branded products line, and Pottery Barn Teen and Pottery Barn Kids-branded upholstered furniture products lines, including raw materials and subcomponents, were all or virtually all made in in the United States.

Proposed settlement terms. Under the terms of the proposed consent order, Williams-Sonoma would be prohibited from making unqualified U.S.-origin claims for any product, unless it 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 components of the product are made and sourced in the United States. Any qualified "Made in USA" claims would have to include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, components, and/or processing. To claim that a product is assembled in the United States, Williams-Sonoma would have to ensure that it is last substantially transformed in the United States, its principal assembly takes place in the United States, and United States assembly operations are substantial. The settlement also includes a rare financial judgment.

Commissioner Chopra’s earlier call for tougher action on "Made in USA" claims. Last year, Commissioner Rohit Chopra took the position that no-money, no-fault settlements were inadequate to remedy serious violations of the FTC’s "Made in USA" standard. "Going forward, in cases involving egregious and undisputed Made-in-USA fraud, I believe there should be a strong presumption against simple cease-and-desist orders," Chopra said in a dissenting statement issued on final approval of settlements in "Made in USA" cases. "Instead, the Commission should consider remedies tailored to the individual circumstances of the fraud, including redress and notice for consumers, disgorgement of ill-gotten gains, opt-in return programs, or admissions of wrongdoing."

Attorneys: Julia Solomon Ensor for FTC. Christie Grymes Thompson (Kelley Drye & Warren LLP) for Williams-Sonoma, Inc.

Companies: Williams-Sonoma, Inc.

MainStory: TopStory Advertising ConsumerProtection FederalTradeCommissionNews GCNNews

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