Made in the USA — or Not

It really should be obvious. Promotional Products are either made in the USA, or they’re made somewhere else.

There are more good reasons today than ever that American-based end-users are requiring distributors source from suppliers with domestic manufacturing facilities, and there is greater urgency now to support American jobs. And that can pay off — the Economic Policy Institute reports that one U.S. manufacturing job supports nearly one-and-a-half jobs in other sectors of the U.S. economy. Supporting the U.S. job market aside, purchasing domestically just makes environmental sense, too. American-made products have a much smaller carbon footprint than sourcing overseas and importing. Finally, responsible sourcing from a labor standpoint is an important consideration, too. U.S. factories are much less likely to have children or prisoners in the labor force working in dangerous manufacturing environments.

That is why charges from the Federal Trade Commission (FTC) surfacing last week caught my attention. The FTC complaint alleges that Gennex Media LLC, which also does business as Brandnex, BrandStrong, PMGOA, and Promotional Manufacturing Group of America, has erroneously claimed on the Brandnex website that the products they sell are made in the United States since at least 2012. The problem is, according to the FTC complaint, that in numerous instances the products were actually imported from China.

“This should be obvious, but you can’t say your products are made in the USA when most of them are made elsewhere,” said Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection. “When companies like Gennex make this false claim, they hurt both people who want to buy American and companies that really do make things here.”

On Brandnex.com, Brandnex price lists, Brandnex’s Facebook header, and in a promotional YouTube video, Gennex and owner Akil Kurji have falsely claimed that Brandnex products are “Made in USA,” “USA MADE,” and “Manufactured Right Here in America!” when in fact Gennex imported wristbands, lanyards, temporary tattoos, buttons, and likely other items as well.

So, what’s ahead? That’s an easy answer, and an all-too-familiar one. The company and its owner will settle FTC charges that they made false, misleading, or unsupported advertising claims that their “Brandnex” products were all or virtually all made in the United States. The settlement requires Gennex and Kurji to pay a monetary judgment of $146,249.24 and with that little hand slap, they walk away. Considering the stakes, I have to admit that settlement number seems a little on the low side.

There is some consolation though.  According to a release from the FTC, under the terms of the proposed settlement Gennex and sole owner and shareholder Akil Kurji are prohibited from making unqualified U.S.-origin claims for any product. In order to make any “Made in USA” claims in the future, Gennex must 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 actually made and sourced in the United States. Under the settlement order, any qualified “Made in USA” claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing.

By now, you might be wondering about some of the “Made in U.S.A.” products you’ve purchased from other suppliers. Were the claims the supplier made about domestic manufacturing legit? If you want to really dig into the details, you first need to know that there are both express claims and implied claims. "Made in U.S.A." and "Our products are American made" are examples of express U.S. origin claims.

It gets a little harder to identify implied claims, so the Federal Trade Commission focuses on the overall net impression of an advertisement, label, or other promotional material. Depending on the context, U.S. symbols or geographic references, such as U.S. flags, outlines of U.S. maps, or references to U.S. locations of headquarters or factories, may convey a claim of U.S. origin. The FTC offers an example: an advertisement features pictures of employees at work at what is identified as the company's U.S. factory, these pictures are superimposed on an image of a U.S. flag, and the advertisement bears the headline "American Quality." Although there is no express representation that the company's product is "Made in USA," the net impression of the advertisement is likely — and most assuredly intended — to convey to consumers a claim that the product is of U.S. origin. Sound like this is pretty serious stuff with the FTC? It is!  The Commission’s stated goal on U.S. product claims is to promote competition and to protect and educate consumers.

If the name Akil Kurji, and Gennex Media, rings a bell, that’s because they’ve been in the news before related to convictions for price fixing in 2019. According to the Advertising Specialty Institute, Gennex Media is not ASI-listed, but other businesses connected with Kurji are. ASI records show that Kurji has been an executive at supplier-listed PMGOA (asi/79982) of Sugar Land, TX. Kurji has also been identified as principal executive at Brandeco LLC, which has done business online under the name BrandNex.com (asi/145204). According to public records, in connection with the price fixing allegations, a Houston judge sentenced Kurji to three years of supervised release and ordered him to pay a $20,000 fine, and also ordered Gennex to pay a $757,717 fine. In the court documents, Kurji and co-conspirators were accused of fixing prices on branded merchandise that again included wristbands, lanyards, temporary tattoos and buttons. Their victims included churches, charities, and nonprofits that purchased from Facebook, Skype, and WhatsApp ad campaigns.

The bottom line for you now is not all that different than for other claims from suppliers — trust your channel suppliers, but as always, verify. American-made jobs are on the line, and end-users leaning in on doing the right thing are counting on you.

Jeff Jacobs has been an expert in building brands and brand stewardship for 40 years, working in commercial television, Hollywood film and home video, publishing, and promotional brand merchandise. He’s a staunch advocate of consumer product safety and has a deep passion and belief regarding the issues surrounding compliance and corporate social responsibility. He retired as executive director of Quality Certification Alliance, the only non-profit dedicated to helping suppliers provide safe and compliant promotional products. Before that, he was director of brand merchandise for Michelin. Connect with Jeff on Twitter, LinkedIn or Instagram, or read his latest musings on food, travel and social media on his personal blog jeffreypjacobs.com. Email jacobs.jeffreyp@gmail.com.