The Federal Trade Commission (FTC) today used its authority under the Made in USA Labeling Rule, which took effect on Aug. 13, 2021, to bring a complaint against Lithionics Battery LLC and its owner, Steven Tartaglia for illegally misrepresenting that its lithium ion cells are made in the United States. The FTC’s complaint alleges that, since at least 2018, Lithionics has falsely labeled its battery products with an American flag image surrounded by the words “Made in U.S.A.,” often accompanied by the statement “Proudly Designed and Built in USA,” when these products are primarily made overseas. The Commission is asking the court to order Lithionics and Tartaglia to stop making deceptive Made in USA claims and pay a penalty for Lithionics’ past claims.
“As our country works to onshore production of lithium ion batteries, it’s critical that honest businesses have a chance to compete, and that consumers can buy American,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “Falsely labeling batteries as made in the United States is against the law, and the FTC is using its new Made in USA rule to make sure this misconduct comes with a price.”
Florida-based Lithionics designs and sells battery products for recreational vehicles, amusement park rides, marine applications, and low-speed electric vehicles. Although the defendants have repeatedly represented that their battery, battery module, and battery management system products are all or virtually all made in the United States, in fact all Lithionics battery and battery module products incorporate imported lithium ion cells, and all Lithionics battery management systems incorporate significant imported components.
Photographs of products bearing this label and other Made in USA claims appeared on the company website, on its social media accounts, and in mail order catalogs, according to the complaint. YouTube videos featured Tartaglia and other employees printing Made in USA labels and putting them on Lithionics products. Lithionics published a chart in its marketing materials juxtaposing its own products with “imports,” and highlighting “advantage[s] of Lithionics battery systems” over imported competing products. Lithionics also misrepresented in mail order catalogues that its products were made in the United States.
Under the Made in USA Labeling Rule, marketers are prohibited from labeling products as “Made in USA” unless the final assembly or processing, and all significant processing that goes into the products occur in the United States; and unless all or virtually all ingredients or components of the products are made and sourced in the United States. The rule also requires all “Made in USA” labels appearing in mail order catalogues to be truthful and non misleading.
The complaint also alleges that Tartaglia and Lithionics also violated Section 5 of the FTC Act since 2018 by misrepresenting that their goods are all or virtually all made in the United States.
The proposed order settling the FTC’s complaints against Lithionics and Tartaglia prohibit the conduct alleged in the complaint. Lithionics and Tartaglia must:
- Shut down bogus Made in USA claims. Stop claiming that products are made in the United States unless they can show that the product’s final assembly or processing—and all significant processing—takes place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States.
- Pay civil penalties: Tartaglia and Lithionics must pay civil penalties of over $100,000, equal to three times Lithionics’ profits attributable to the illegal activity.
The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides further guidance on making non-deceptive “Made in USA” claims.
The Commission vote to authorize the staff to refer the complaint to the DOJ and to approve the proposed consent decree was 4-0. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the Middle District of Florida.
NOTE: 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. Consent decrees have the force of law when approved and signed by the District Court judge.