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Now, the federal agency is demanding the accused pay a six-figure penalty, as the stepped-up enforcement on deceptive domestic-origin assertions continues.

Would-be deceivers be warned: The Federal Trade Commission is cracking down on bogus Made-in-the-USA claims on products.

The FTC recently hit a Utah-based apparel company with a six-figure fine for falsely claiming its clothing was produced in the U.S.

The agency has filed a civil complaint against Ohio-based Adam J. Harmon and his companies, alleging that they lied during the COVID-19 pandemic by asserting personal protective equipment they had for sale was domestically made. In fact, the PPE was imported, authorities assert.

Now, the FTC has proposed an order to settle its complaint. It would compel Harmon and his companies, Axis LED Group LLC and ALG-Health LLC, to pay a civil penalty of $157,683 that would be due immediately. The complaint/proposed order has been referred to the Department of Justice.

“The defendants are also subject to a $2.8 million redress judgment, which is suspended due to their inability to pay,” the FTC said. “Should the FTC discover that the defendants have misstated the value of any assets or failed to disclose them, the agency will seek to have the suspension lifted and the full judgment due immediately.”

As COVID-19 gripped the United States in early 2020, Harmon began operating a business he called ALG-Health LLC, selling PPE such as masks, gowns and gloves, the FTC said.

Through social media posts, marketing materials and labels, Harmon claimed that the PPE items were manufactured in the United States. Authorities said that was a lie: The products were almost entirely imported, and thus Harmon’s domestic-origin claims violated the FTC Act, the COVID-19 Consumer Protection Act and the Made in the USA Labeling Rule. Harmon also falsely portrayed that lighting fixtures he sells were Made in America, authorities noted.

Furthermore, Harmon marketed that his PPE products were superior because they were produced in America. “These false claims deceived consumers and undermined honest competitors,” the FTC said.

This case is a cautionary tale for #promoproducts companies that want to make Made in USA claims about items they sell. Wouldn't want to email your customers to tell them you lied about the country-of-origin of your products...https://t.co/WJVJ9T0kkd @asicentral @ASI_MBell

The FTC’s proposed settlement order would prohibit Harmon and his companies from claiming that products are made in the United States unless they can either 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, or clearly and prominently qualify origin claims to disclose imported content or processing.

In April, the FTC started enforcing new rules related to claims that a product is American-made.

The FTC says that protecting consumers and honest businesses from deceptive Made-in-USA claims is a key priority – something companies in the promo products industry and other markets should heed.

Over the last year, the agency has brought three other cases in this area, including the recently settled complaint against Lions Not Sheep, a seller of printed apparel with right-wing messaging that removed foreign-origin clothing tags and replaced them with phony Made-in-USA labels, among other domestic-origin deceptions.

Lions Not Sheep and its owner, Sean Whalen, must pay $211,335 and notify customers that its clothing is mostly produced abroad, according to an FTC order.

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