Kubota has agreed to a stipulated order that imposes certain requirements on the claims they make. Firstly, they are no longer allowed to make unqualified claims about the origin of their products unless they can demonstrate that the final assembly and significant processing take place in the United States. Additionally, they must prove that the ingredients or components used in the product are predominantly sourced and made in the U.S.
Kubota North America Corporation, a manufacturer of tractors, has been ordered to pay a $2 million civil penalty by the Federal Trade Commission (FTC) for falsely labeling certain replacement parts as "Made in USA."
This stipulated court order, agreed upon by the company and filed by the Department of Justice on behalf of the FTC, not only imposes the penalty but also prohibits Kubota from making deceptive claims. This penalty is the largest ever in a Made in USA case.
“Today’s settlement includes the largest civil penalty assessed for violating the Made in USA Labeling Rule,” said Samuel Levine, Director of the Bureau of Consumer Protection. “The FTC will continue cracking down on deceptive Made in USA claims that cheat consumers and honest businesses.”
In 1999, Kubota faced legal trouble with the FTC for falsely claiming their lawn tractors were made in the US. The FTC issued an order for Kubota to rectify their claims and follow strict guidelines. Kubota worked for two decades to regain consumer trust and in 2019, the FTC order expired. Kubota now operates without FTC restrictions but still prioritizes transparency and accurate marketing claims.
Kubota has agreed to a stipulated order that sets forth various requirements concerning the claims they make. One of the key provisions is that they are no longer permitted to make unqualified claims about the origin of their products unless they can substantiate that the final assembly and significant processing take place in the United States. Moreover, they must ensure that the ingredients or components used in the product are predominantly sourced and made in the U.S.
New guidelines for Kubota: No more unqualified claims about products being made in the USA unless they can prove that the final assembly and significant processing occur in the U.S., along with the majority of ingredients or components being sourced and made in the U.S.
For qualified claims, Kubota must clearly disclose the presence of foreign parts, ingredients, components, or processing in their 'Made in USA' claims.
When asserting that a product is assembled in the U.S., Kubota must ensure that it undergoes substantial transformation in the U.S., with principal assembly operations taking place there. Additionally, Kubota will be subject to a civil penalty of $2 million, payable to the U.S. Treasury.
The FTC is dedicated to ensuring the accuracy of "Made in USA" claims. To provide guidance on making truthful claims, the FTC has issued the Enforcement Policy Statement on U.S. Origin Claims. Furthermore, starting from August 13, 2021, the FTC's Made in USA Labeling Rule is in effect.
Companies that violate this rule may face civil penalties. The Commission unanimously voted 3-0 to authorize the staff to refer the complaint to the DOJ and approve the stipulated consent decree. Subsequently, the DOJ filed the complaint and consent decree on behalf of the Commission in the U.S. District Court for the Northern District of Texas.
The Commission authorizes the filing of a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. When the Commission suspects or anticipates a violation of the law, it has the authority to file a complaint.
Furthermore, when a District Court judge approves and signs a consent decree, it becomes legally binding.
In this specific instance, Julia Solomon Ensor, the lead staff attorney in the Bureau of Consumer Protection, was involved. The FTC is dedicated to protecting consumers and ensuring a fair marketplace.
For more information on consumer topics, please visit consumer.ftc.gov. If you encounter any fraudulent activities, scams, or unethical business practices, please report them at ReportFraud.ftc.gov. Stay informed about the latest news and alerts from the FTC by following them on social media, reading their consumer alerts and business blog, and subscribing to their newsletter.
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