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Late last year, the Federal Trade Commission announced that it had reached an agreement with Resident Home, the parent company of Nectar Sleep, and the owner of Resident Home, resolving accusations that they had made statements false, misleading, or unsubstantiated claims that their DreamCloud mattresses were manufactured in the United States. As part of the settlement, the defendants agreed to pay $753,000.
In its complaint, the FTC alleged that — even though the company entered into a consent order in 2018 agreeing to stop misrepresenting US origin — Nectar Sleep and its parent company continued to misrepresent US origin. American origin concerning its mattresses. . The FTC said the defendants falsely claimed that their DreamCloud mattresses were “proudly made with premium materials that are 100% Made in the USA.”
The Commission voted 3-2 to file the complaint and release the consent order for public comment, but never finalized the order. Presumably, the settlement was never finalized because, with the FTC down to four commissioners for several months, split 2-2 along party lines, the Commission lacked the votes to do so. With the confirmation of Alvaro Bedoya as fifth commissioner in May, Democrats have control of the Commission again and are able to push forward cases like this.
Yesterday, by a vote of 3 to 2, the Commission announced that it had voted to finalize the order. Commissioners Noah Joshua Phillips and Christine S. Wilson, who voted against the order, issued a dissenting statement, arguing, as they did in 2021, that she did not believe the FTC had legal authority to seek the redress it had obtained in that case. They also stated that “the monetary relief in this settlement far exceeds any harm suffered by consumers who saw the misleading statement and purchased a DreamCloud mattress or any reasonable estimate of damages.” The majority issued a joint statement in response, sticking to its position that the relief obtained in this case was warranted. With a majority taking aggressive stances on enforcement in light of what it calls “extraordinarily demanding terms”, we should continue to expect to see these kinds of divided votes coming out of the Commission.
It is important to note, however, that while the commissioners disagreed on the appropriate remedy in this case, the underlying substantive legal issues were uncontested. Under the FTC’s Enforcement Policy Statement on US Origin Claims, advertisers must not make outright claims of US origin unless their products are “all or substantially all” made in the United States. About a year ago, the FTC also codified this standard into a new “Made in USA Labeling Rule,” which applies to product labeling, mail-order catalogs, and sales promotional materials. by correspondence (which would include websites).
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