According to a press release sent out by the Federal Trade Commission (FTC), Kubota is required to pay a $2 million civil penalty after the Department of Justice's action against the company for falsely labeling some of its replacement parts as being "Made in USA."
"Today's settlement includes the largest civil penalty assessed for violating the Made in USA Labeling Rule," said Samuel Levine, Director of the Bureau of Consumer Protection. "The FTC will continue cracking down on deceptive Made in USA claims that cheat consumers and honest businesses."
The complaint filed in the case charges that since at least 2021, Kubota has labeled thousands of replacement parts for its tractors and other agricultural equipment as Made In USA, even though they were made entirely overseas. In addition, after the company moved manufacturing for some parts to other countries, it failed to update the products' labeling to reflect that change, leaving them labeled as "Made in USA," according to the complaint.
But this is not the first time Kubota has been sued by the FTC. Back in 1999, Kubota was sued for falsely claiming that a line of lawn tractors it manufactured was Made in USA, and was subject to an FTC order in that case that expired in 2019.
The stipulated order against Kubota, which the company has agreed to, includes several requirements about the claims the company makes:
Restriction on unqualified claims: Kubota will be prohibited from making unqualified U.S.-origin claims for any product, unless it can show that the product's final assembly or processing--and all significant processing--takes place in the U.S., and that all or virtually all ingredients or components of the product are made and sourced in the U.S.
Requirement for qualified claims: Kubota is required to include in any qualified Made in USA claims a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing.
Requirement for assembly claims: Kubota must also ensure, when claiming a product is assembled in the U.S., that it is last substantially transformed in the U.S., its principal assembly takes place in the U.S., and U.S. assembly operations are substantial.
Civil Penalty: The order includes a civil penalty of $2 million, which must be paid to the U.S. Treasury.
The FTC is committed to ensuring that "Made in USA" claims are truthful. The FTC's Enforcement Policy Statement on U.S. Origin Claims provides guidance on making non-deceptive "Made in USA" claims. In addition, the FTC's Made in USA Labeling Rule went into effect on Aug. 13, 2021. Companies that violate the Rule from that date forward may be subject to civil penalties.
