August 17, 2022
Lighting Company’s “Made in USA” Claims may cost them $3 million
ESCO-focused LED company in hot water with Federal Trade Commission
The Federal Trade Commission (FTC) believes that Patriot LED lighting products have been falsely marketed as domestic products and that the company should pay penalties of $2.96 million. The FTC has referred the matter to the U.S. Department of Justice stating that the company “marketed, labeled, and sold wholly imported Chinese lighting products, or products containing significant Chinese inputs, as Made in the United States.”
Patriot LED is an Ohio-based lighting brand that goes to market primarily through the ESCO and direct-sales channels in pursuit of government lighting projects and other opportunities. The Patriot LED website uses the “Proudly Assembled in the USA” moniker as part of its logo and a major part of its marketing. The brand’s website, specification sheets and brochures repeatedly cite that Patriot LED products are compliant with Buy American Act (BAA), the Trade Agreements Act (TAA) and the American Recovery and Reinvestment Act (ARRA).
Above: Image excerpt from FTC complaint
At the onset of COVID-19 in 2020, company owner, Adam J. Harmon, pivoted and created a sister company to sell personal protective equipment (PPE) such as masks, gowns, and gloves. Those products are also accused of false origin claims.
The parent company that promotes the Patriot LED brand is Axis LED Group, LLC and the PPE offshoot company is ALG-Health LLC. Axis LED Group has no affiliation with Canadian architectural lighting company, Axis Lighting.
The FTC charged Harmon and his two companies, Axis LED Group, LLC and ALG-Health LLC, with violating the COVID-19 Consumer Protection Act, the Made in USA Labeling Rule and the FTC Act. The agency’s proposed order would stop them from making deceptive claims that products were Made in USA. The order also would require them to pay a $2.96 million civil penalty for their past deceptive claims.
Through social media posts, marketing materials, and labels, the defendants claimed that their LED lighting products and COVID-19 personal protective products were manufactured in the United States. In fact, the FTC states that the products were almost entirely imported, and that the defendants’ conduct violated the FTC Act, the Covid-19 Consumer Protection Act, and the Made in the USA Labeling Rule.
FTC Demands Enforcement:
The proposed order settling the FTC’s complaint against Harmon, Axis LED Group, LLC, and ALG-Health LLC prohibits the conduct alleged in the complaint. Harmon and his companies must:
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Stop making deceptive U.S.-origin labeling and advertising claims. Harmon and his companies are prohibited from claiming that products are made in the United States unless they can (1) 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, or (2) clearly and prominently qualify origin claims to disclose imported content or processing.
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Provide substantiation. The defendants must substantiate all Made in USA and COVID-19-related claims, and refrain from making misleading claims for any products or services they provide.
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Pay civil penalties. The defendants must pay a $157,683.37 civil penalty, which is due immediately. The defendants are also subject to a $2.8 million redress judgment, which is suspended due to their inability to pay. Should the FTC discover that the defendants have misstated the value of any assets or failed to disclose them, the agency will seek to have the suspension lifted and the full judgment due immediately.
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 5-0. Commissioners Noah Joshua Phillips and Christine S. Wilson issued a joint concurring statement. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the Northern District of Ohio.
Above: Photo excerpt from FTC complaint
