Breaking News: FTC Takes Major Action Against Shinola, Demands "Where American Is Made" Slogan To Be Dropped Immediately

Last year, HODINKEE published an article detailing deceptive marketing practices taking place in the American watchmaking industry. Shortly after publishing, the Federal Trade Commission (FTC) took action and issued guidance – guidance that Shinola chose to ignore. Today, the FTC took direction action against the largest of all American watch companies, Shinola, instructing them to make major changes in their marketing collateral and products, even suggesting retroactive corrective tags and inserts in watches already on the shelves and with clients and demanding significant changes in advertising copy.

100% of the cost of materials used to make certain watches is attributable to imported materials.

Federal Trade Commission In A Letter To Shinola

In the FTC's previous guidance, they clarified that for a watch to be "Made in USA" it needs to be manufactured (not assembled) completely in the USA, including the movement. Furthermore, they specified that their restrictions apply not only to “Made in USA" but also to any and all marketing phrases or even imagery that would deceive or confuse the average consumer.  By law in the United States, language that states or suggests that a product is made in the USA, can only be applied to products that are "all, or virtually" made in the USA.

In the FTC's closing letter to Shinola, they specify that the company will stop using the phrase "Where American is Made." In addition, the phrase "Built in Detroit" is now gone from Shinola's website, replaced by “The first watches assembled at scale in the United States in decades.” A very different message, indeed. The FTC noted that "100% of the cost of materials used to make certain watches is attributable to imported materials." This means that not a single component on many of these "Built In Detroit" watches came from the United States, just the assembly was done within the US.

So What Did The FTC Say, Specifically?

The FTC detailed a remedial action plan that Shinola is already implementing. This includes:

1. Applying corrective hangtags and information cards to watches, bicycles, and other affected products to alert consumers to the fact that those products include significant imported content
   
2. Redesigning watch casebacks to remove "Built In Detroit"
   
3. Updating embossed claims in affected leather goods
   
4. Updating Internet and hardcopy advertising materials to qualify claims
   
5. Updating employee training materials
   
6. Updating advertising materials distributed to third-party retailers
   
7. Transitioning away from the Company's "Where American is Made" slogan
   
8. Developing enhanced policies and procedures, including additional legal review, to avoid future deception or mislabeling.
   

The FTC mentioned that they will continue monitoring Shinola's advertising "certain materials presented to us during the pendency of our investigation raise concerns that Bedrock may make deceptive U.S.-origin claims in the future." (Bedrock is Shinola's parent company.)

For Your Consideration – "American Made" And "Swiss Made" Are Very Different Things

The “Made in USA” mark is very different than other marks used around the world in terms of watchmaking. “Swiss Made” and “Made in Germany” do not require 100% of the watch to be made in country. “Made in USA” requires every component in the watch, including the movement, to be actually manufactured in the USA. The FTC advises that a screwdriver assembly or finishing of imported parts does not meet their guidelines. So, while the actions taken by the FTC against Shinola are meaningful and illuminating, if the same stringent monitoring of manufacturing and terminology were applied to Switzerland and Germany, very few watches would be "Swiss Made".

Regardless, while the “Made in USA” mark is strict in comparison to others, hopefully this high-profile action will encourage American watch companies to begin building the expertise necessary to manufacture all watch components (including the movement) in the USA. And that is a day I truly look forward to.

Read the open letter to Shinola from the FTC here.