California Relaxes Law for Made in USA Product Labels

Recent polls show U.S. consumers are willing to pay extra for products labeled Made in USA in the interest of supporting the American economy.

But as it turns out, the legal requirements for claiming a product is American-made leave room for some foreign components to enter the mix.

California Made in USA Labeling Laws

For over 50 years, the state of California had a strict labeling law that required products labeled “Made in America” to consist only of components manufactured and assembled in the U.S. The state relaxed that standard in September 2015.

Now, California’s new law now allows a product to be labeled Made in USA if either less than five percent of the final wholesale value of the product can be traced to non-U.S. materials, or if the manufacturer can show that non-U.S. components are necessary to make the finished product and those components do not account for more than ten percent of the final product’s wholesale value.

California had enacted its older, stricter law back in 1961, in response to allegedly deceptive “Buy America” promotions being conducted by manufacturers of foreign products. The state left this stricter standard in place, while other states allowed manufacturers to include at least some foreign components in their Made in USA goods.

California’s new law is more in line with standards set by most other states. It’s also more consistent with the standard set by the Federal Trade Commission. The FTC requires products labeled Made in USA to be “all or virtually all” made in the U.S. – a standard with lots of room for interpretation by the courts.

Trade industry representatives say the new California law will give companies more flexibility in sourcing their products while at the same time reducing those companies’ exposure to claims of consumer fraud. They say the older, stricter standards were almost impossible for a business to comply with and still remain competitive.

California businesses had complained that manufacturers from other states were simply ignoring the old California law, producing products labeled Made in USA with foreign components and selling them in California.

New Made in USA Law Faces Opposition

But consumer groups take a different position. A representative of the Consumer Federation of California, which opposed the change in the law, says that that the prior version of the Made in USA labeling law was clearer and made for more honest product labeling.

The new law goes into effect at the same time a Made in USA consumer fraud class action lawsuit is being brought against Macy’s Inc. and Citizens of Humanity. The lead plaintiff, Louise C., says she chose to buy a pair of Citizens of Humanity jeans at a Macy’s store in May 2015 in part because the labeling on the jeans indicated they had been Made in the USA.

She argues that by labeling the jeans as Made in USA, Macy’s and Citizens of Humanity fraudulently concealed information about the true origin of the jeans.

Another consumer has also filed a similar class action lawsuit against Nordstrom and AG Adriano Goldschmeid, raising similar allegations over Made in USA labeling. The Nordstrom Made in USA lawsuit survived a motion to dismiss in October 2014.

Join a Free Citizens of Humanity ‘Made in the USA’ Class Action Lawsuit Investigation

If you purchased one or more Citizens of Humanity apparel products in California in the past four years based, in part, on a “Made in the USA” label, you may be able to seek compensation by joining a class action lawsuit investigation.

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