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Most Jewelry Can’t Be Called “Made in USA” Under FTC Rule


If a jewelry manufacturing plant is located in the United States, that plant can say its jewelry is made in the USA, right?  Or at least manufactured in America? And if lab-grown diamonds are created in a U.S. factory, a company can say its stones are produced here, right?

In most cases, the answer is likely no. In fact, under a rule just passed by the Federal Trade Commission, very few jewelry products can make a straight-up “Made in the USA” claim, says Sara Yood, deputy general counsel of the Jewelers Vigilance Committee.

For a long time, the FTC’s guidance has been clear: For a product to be labeled “Made in the USA,” not only must “significant processing” take place in the United States, but “all or virtually all” of its component parts must be produced here too.

Which rules out most jewelry, since very little gold, silver, previous gemstones, or other component materials come from the United States.

“If you are mining turquoise in Arizona and buying silver directly from a mine in Montana and making [a piece] in your workshop in St. Louis, that’s okay [to say it’s ‘Made in the USA’],” Yood says. “But not otherwise.”

This has long been standard FTC guidance. On July 1, the agency codified these guidelines into a rule, which gives the FTC increased enforcement powers including the ability to levy fines of up to $43,280 per violation—though the agency noted “stiff penalties are not appropriate in every instance.”

Explains Yood: “The FTC looks at a rule as something that you really have to pay attention to, because if you mess up, they’re going to fine you. When the FTC makes a rule, it gives them the power to issue civil fines instead of going through a whole enforcement and settlement process.”

(We should note that the FTC’s Jewelry Guides are considered guides, rather than rules. That doesn’t mean they can’t be enforced, or aren’t cited by legal authorities. But a guide is generally not viewed as being as strong as a rule.)

Yood notes that most qualified claims pass muster, such as “Made in the USA with the world’s finest materials,” or “Made in the USA with Italian gold,” or “Made in the USA with Sri Lankan sapphires.” She points out that Apple labels its products “designed in the USA.”

But unadorned “manufactured in the USA” or “U.S.-produced” claims can run into trouble, since the FTC views them as fundamentally the same as a “Made in the USA” claim, Yood says.

In 2016, the FTC warned Shinola against using the slogan “Where American Is Made,” noting that, while the company’s watches were produced in a U.S. factory, in some cases, 100% of their component parts were produced abroad. The agency allowed Shinola to use the phrase “Built in Detroit,” if it was appended with “using Swiss and imported parts.”

In its final rule, the FTC specifically discussed watch manufacturing, citing a 2015 letter it sent to Niall Luxury Goods.

“Unqualified U.S.-origin claims for watches that incorporate imported movements may mislead consumers because…consumers may place a premium on the origin and quality of a watch movement and consider the failure to disclose the foreign origin of this component to be material to their purchasing decision,” it said.

What about lab-grown companies that tout their products as being “Made in the USA” or “Grown in the USA”? Even assuming the claim is true—and every diamond the company sells was created in a U.S. factory—the company might potentially run into trouble if its products are cut in China and India.

“If they are sent to India or China for cutting or polishing, the FTC would likely see them as a product of China or India,” Yood says. “The issue here is that the U.S. government’s standard is what it calls ‘substantial transformation.’ If you cut a lab-grown diamond overseas, U.S. Customs would argue it is not an American product, and that its origin is China.”

That likely rules out U.S.-“made” or “produced” claims for goods cut abroad, though Yood isn’t sure how the FTC would view “grown in the USA.”

“Grown is an interesting one.… If I were a lab-grown company and I wanted to make [the grown] claim, I would reach out to the FTC for some kind of advisory opinion on that.”

For a long time, the jewelry industry has tried to convince the FTC that gold that’s recycled or refined here should qualify as made in the USA, since it has undergone substantial transformation in the United States. In 2014, following a request for an advisory opinion by JVC, Richline Group, and other industry associations, the FTC declined to allow “Made in the USA” claims for jewelry made in U.S. factories with recycled metals—even when that recycling happened domestically.

“[As] gold and precious minerals may be—and often are—mined internationally, it is highly likely that any piece of recycled jewelry might contain components or natural resources that originated outside the United States,” FTC secretary Donald Clark wrote in a letter. “Unless a marketer can substantiate that all components of a recycled piece—including natural resources—originated in the United States, based on the record before us, it appears that an unqualified U.S.-origin claim may deceive a significant number of consumers.”

Also of note: The FTC declined to provide a carve-out for “good faith efforts to comply”—which means that even if a company believes its messaging is truthful (as Shinola apparently did), the FTC still reserved the right to take action against it. But it pledged to “generally preserve enforcement resources for intentional, repeated, or egregious offenders.”

Earlier this year, the FTC took action against Gennex, which sells promotional items, for billing products as “Made in USA” that were actually imported from China.

Yood admits that some jewelry companies may be disappointed in the rule, especially since it doesn’t allow an exemption for materials refined or recycled in the United States. But she notes that the guidance has remained virtually the same since 1997.

“They are trying to write a rule with as broad an application as possible,” she says. “As we know, the jewelry industry is sometimes its own thing.

“The FTC’s position [on this] is quite popular across the aisle,” she adds. “It’s one thing that many Democrats and Republicans agree on.”

Which means that jewelry companies need to be careful.

“I have seen a giant booth at the JCK Show that was selling fine jewelry with ‘Made in America’ plastered on the wall,” Yood says. “I see it all the time. It’s really important to strongly evaluate the claims you are making about your products.”

She adds that anyone with questions can reach out to the JVC for guidance. The FTC’s tips and advice for complying with the rule can be seen here.

(Photo courtesy of Commander, U.S. Naval Force

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By: Rob Bates

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