NAD Recommends J-B Weld Company Discontinue Certain “Made in USA” Claims; Advertiser to Appeal

New York, NY – Jan. 17, 2019 – The National Advertising Division has recommended that J-B Weld Company, LLC discontinue advertising claims made on certain product packaging and in online advertisements that its products are “Made in USA” and “they have always been made in the USA.” The claims were challenged by Illinois Tool Works Inc., maker of competing epoxy and adhesive products.

NAD is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus.

The challenger argued that because the advertised products contain foreign components, J-B Weld’s unqualified “Made in USA” claims are misleading. The advertiser countered that its products fully comply with the Federal Trade Commission’s (“FTC’s”) “Made in USA” standard.

When a product or claim reviewed by NAD is also the subject of federal regulation or guidance, as is the case here, the self-regulatory forum attempts to harmonize its efforts with those of the regulatory world.

NAD noted that, per FTC’s guidance on this subject, a product making an unqualified “Made in USA” claim must be “all or virtually all” made in the United States. The FTC defines “all or virtually all” to mean that all significant parts and processing that go into the product must be of U.S. origin, such that the product contains only a negligible amount of foreign content. Additionally, the product’s final assembly or processing must take place in the United States.

NAD noted that, in this case, the FTC’s guidance is silent on the question of whether the specific components at issue – the tubes, caps, syringes, etc. – should be considered part of the product’s packaging or part of the product itself.

Following its review of the advertiser’s claims in the context presented, NAD determined that consumers viewing the “Made in USA” claim on J-B Weld packaging are likely to believe that the glue, tube, cap, and any additional components of the challenged products contain little or no foreign content.  NAD noted that there is simply nothing about the claim or the context in which it is presented that indicates otherwise.

NAD was unconvinced by J-B Weld’s argument that, even if the caps, tubes, and applicator nozzles were considered part of the product rather than the packaging, they were too insignificant to have any meaningful influence on the consumer’s purchasing decision and therefore need not be considered when determining compliance with the FTC’s “all or virtually all” standard. To the contrary, NAD found that these components are integral to the consumer’s ability to use the products properly – to prevent the glue from drying out between uses, allow precise application of the product, prevent different constituents from mixing prior to application, and other purposes. J-B Weld chose to use particular tubes or syringes, or include applicator nozzles, in order to provide an added value to the consumer and differentiate itself from its competitors. Further, NAD noted, where there are similarities between the caps, tubes, nozzles and applicator nozzles in the marketplace between competitors’ products, NAD found that a “Made in USA” claim could have an even greater impact on consumers.

NAD next pointed to the FTC’s Enforcement Policy Statement which explains that when evaluating whether a company has complied with the “all or virtually all” standard, three main factors are to be considered: where the product was processed; the portion of U.S. manufacturing costs, and the remoteness of any foreign content.

In support of its claim, the advertiser provided NAD with confidential information showing the percentage of the average price paid by its direct customers for the entire packaged product (i.e. the price paid by retailers) attributable to the products’ tubes, caps, and nozzles, as well as the percentage of the average purchase price paid by consumers attributable these materials. However, NAD found, these figures are irrelevant to the issue at hand.

NAD noted that the advertiser did not provide NAD with information regarding its manufacturing costs, which, pursuant to the Federal Trade Commission’s (“FTC’s”) Enforcement Policy Statement on U.S. Origin Claims, are the appropriate focus when evaluating whether a company has complied with the “all or virtually all” standard. Likewise, the advertiser failed to provide the requisite evidence pursuant to explicit FTC guidance to companies seeking to support an unqualified Made in USA claim that they should analyze their own manufacturing costs, not the cost to consumers. The failure to provide such evidence led NAD to determine that the evaluated claims were not adequately supported. Consequently, based on the evidence in the record, NAD concluded that J-B Weld had not provided a reasonable basis for the claims “Made in USA” and “they have always been made in the USA” made on its website and on products with foreign-made packaging, and recommended that they be discontinued.

In its advertiser’s statement, J-B Weld stated that it firmly stands behind the accuracy of its USA origin statement and its compliance with FTC guidelines and will appeal NAD’s decision to the National Advertising Review Board.

Note: A recommendation by NAD to modify or discontinue a claim is not a finding of wrongdoing and an advertiser’s voluntary discontinuance or modification of claims should not be construed as an admission of impropriety. It is the policy of NAD not to endorse any company, product, or service. Decisions finding that advertising claims have been substantiated should not be construed as endorsements.