Antitrust Lawyer Blog Commentary on Current Developments

FTC Alleges Stanley Made False Made in the USA Claims About Its Tools

The Stanley Works, a U.S. toolmaker, will pay a $205,000 civil penalty to settle Federal Trade Commission charges it falsely claimed its Zero Degree ratchets were Made in the USA. The claims allegedly violated a 1999 FTC order issued against the company to resolve earlier allegations that it had made false Made in the USA claims. The 1999 order prohibits it from, among other things, misrepresenting the extent to which any professional grade hand tools, including wrenches, ratchets, sockets, and chisels, are made in the United States.
“Many consumers rely on Made in the USA claims when choosing products. They expect those claims to be truthful,” said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. “Companies that market products as Made in the USA must verify information from their suppliers before they make that claim.”

According to the complaint, the Zero Degree ratchets, made under Stanley's MAC Tools trademark, were marketed as Made in the USA, when the foreign content was actually a substantial part of the product. For a product to be labeled Made in the USA, it has to be all or virtually all made domestically. A manufacturer may still label a product as Made in the USA when the cost of any foreign parts and foreign labor involved in making the item is negligible.

The settlement announced today imposes a $205,000 civil penalty – a significant portion of the profits made from selling the mislabeled wrenches – and prohibits Stanley from violating the 1999 order. By filing this new complaint, the expiration date of the 1999 order is now extended to 20 years from the date the new complaint is filed.

The Commission vote to refer the complaint and consent decree to the Department of Justice for filing was 5-0.
Guidance on how to comply with the Made in USA standard is on the FTC website at http://www.ftc.gov/os/statutes/usajump.htm.

The complaint and consent decree were filed on June 8, 2006 in the U.S. District Court for the District of Connecticut by the Department of Justice at the request of the FTC.

NOTE: The Commission authorizes the filing of a 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. The complaint is not a finding or ruling that the defendant actually has violated the law. The case will be decided by the court.

Camelia C. Mazard
202-589-1837
cmazard@dbmlawgroup.com