Walmart's "Made in the USA" claims take another hit

MoneyWatch headlines for June 30, 2016

If a product is labeled "Made in the USA," it means what it says, right? When it comes to some products Walmart (WMT) sells with that label, an advertising watchdog group says it ain't so. Truth in Advertising.org (TINA) alleges that it found more than 100 products on Walmart.com that were erroneously labeled as "Made in the USA," saying they were either partially or completely produced overseas.

The activists found the same issues last year with 200 Walmart.com listings and notified the Federal Trade Commission of its findings. After the world's largest retailer revamped its website to clarify how much of a product is made using domestic and international materials, the FTC closed its investigation.

But now TINA has asked the FTC to revisit the issue in light of its latest findings.

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Under FTC rules, companies can label products as "Made in the USA" only when "all" or "virtually all" of them are made in the U.S. and contain negligible foreign content. In TINA's view, Walmart is no doubt in the wrong. An FTC spokesman said it was against its policy to discuss its response to requests from outside the agency.

"In all events, there's no question that labeling a product as made in the U.S. when it contains significant foreign content or is wholly made elsewhere is a violation of FTC law," wrote Shana Mueller, a TINA spokeswoman, in an email.

Walmart, which yesterday hosted an "open call" for U.S. entrepreneurs interested doing business with the chain, responded in a statement that TINA's claims are "not new." It added: "And as we've said all along, we will continue to work with our suppliers to help ensure we are giving our customers the transparency and authenticity they are looking for."

Since TINA's original FTC complaint, the Bentonville, Arkansas-based retailer has added a disclaimer to product listings indicating that the origin information may not be accurate and that it's up to consumers to verify it. TINA counters that such caveats aren't robust enough to address the legal issues raised by bogus product origin information. Moreover, most people probably won't notice the warnings because they're difficult to find on Walmart.com, TINA said.

"Walmart certainly has work to do to ensure consumers, especially those who studies have shown pay more for American-made items, are getting accurate information about where the company's products are really made," according to TINA.org.

The FTC is scrutinizing the "Made in the USA" claims of dozens of companies and has closed about 40 cases over the past two years. It filed suit in February against Chemence Inc., a glue company that allegedly claimed that certain products were made in America even though they were produced with a "significant amount" of foreign chemicals.

Domestic manufacturing has become a hot-button issue in the presidential election. Presumptive Republican nominee Donald Trump has promised to rip up the trade deals many critics blame for the loss of 5 million manufacturing jobs between 2000 and 2014, although many experts argue that those jobs are unlikely to ever return. Trump's opponent, Democrat Hillary Clinton, has called for tax breaks to encourage investments in hard-hit manufacturing communities.