The FTC announced that it closed its investigation into whether Rainbow Play Systems' marketing materials may have overstated the extent to which the company's products are made in the United States.
In its closing letter, the FTC expressed the concern that although Rainbow operates a plant and employs workers in South Dakota, some of Rainbow's playsets "incorporate significant imported parts and equipment."
The FTC reported that Rainbow implemented a two-step remedial action plan to avoid deceiving consumers. First, Rainbow updated its website, printed catalog, and social media posts. Second, Rainbow undertook a comprehensive review and notification process to ensure the accuracy of the advertising claims being made by its distributors. This included:
- Telling all distributors to stop making unqualified "made in US" claims within fourteen days;
- Conducting a granular review of distributor materials to ensure compliance;
- Providing technical assistance to distributors who had trouble updating online materials;
- Distributing a memo outlining acceptable claims; and
- Introducing a new distributor agreement that addresses the use of false and unapproved advertising claims.
The FTC also noted that it is "appropriate" for the company to promote the fact that it employs workers in the United States so long as it does not overstate the extent to which its products are made here.
In order to make an unqualified "made" or "manufactured" in the United States claim, the FTC says that the product must be "all or virtually all" made in the U.S.