Walmart’s Made-In-USA Shell Game
After a watchdog group tattles on Walmart's deceptive advertising to the FTC, the company tries to fix the problem by creating circles of confusion. The press falls for it, but Walmart's critic sees a continued web of "lies."
By TODD OPPENHEIMER
If you spend much time nosing around Walmart’s website, it won’t be long before you run into a rather bizarre sleight of hand.
First, to promote its devotion to American manufacturing, the world’s largest retailer (2015 sales: $482 billion) created a special collection of Walmart goods. Those products were gathered in a virtual section of the website tagged to the term, “Made in USA.” Over time, that search term has enabled customers to gather hundreds of purchase options, each one claiming to have been made in America. An example is a T-shirt listed under the following title: “American Beauties Made in the USA Nose Art T-Shirt by Erazor Bits.”
The company’s little shell game used to be far more blatant. “Walmart.com is replete with false and deceptive advertising,” said Bonnie Patten, executive director of Truth in Advertising.
If you look further into the product descriptions on this T-shirt and other “Made-in-USA” items, you stumble upon this helpful note: “Important Made in USA Origin Disclaimer: For certain items sold by Walmart on Walmart.com, the displayed country of origin information may not be accurate or consistent with manufacturer information. For updated, accurate country of origin data, it is recommended that you rely on product packaging or manufacturer information.”
These disclaimers are often followed by Walmart’s additional squirms away from its original Made-in-USA claim. For the American Beauties T-shirt, for example, the manufacturer information that Walmart lists in its product specifications states the following: “Country of Origin—Components: USA and/or Imported… Country of Origin—Assembly: USA and/or Imported.”
The company’s little shell game used to be far more blatant than this. And the whole story has not been sitting well with Bonnie Patten, executive director of Truth in Advertising. Consider the campaign’s odd history.
On July 14, 2015, Patten wrote an eight-page letter to the U.S. Federal Trade Commission (the agency charged with the nation’s consumer protection) complaining that Walmart was deceiving its customers. “Walmart.com is replete with false and deceptive advertising,” her letter stated. Even more curiously, Patten noted that after her organization had warned the company about the deceptions on June 22, the company promised to fix the problem–which it described as “coding errors”–within two weeks. A month later nothing had changed. From that point forward, the twists and turns only multiplied.
Considering Walmart’s heavily promoted campaign to sell more stuff that’s made in America, and to invest 10 years and $250 billion in the effort, why, the Washington Post wondered, was the Made-in-USA label “scrubbed from its website?”
For months, Walmart made only minimal fixes. Finally, in the fall of 2015, the company removed the most overt contradictions between its products’ provenance and the company’s Made-in-USA labels. In many cases, products that were prominently labeled by Walmart as “Made in USA” were listed in the next column as sourced from outside the U.S. (primarily China), and sometimes manufactured overseas in their entirety. Then, on October 20, the FTC made its move. With a gracious thank-you note, FTC attorney Julia Ensor wrote Walmart acknowledging that the company “took several steps to prevent consumer deception.” Those steps, she said, involved removing a variety of country-of-origin claims, and a procedure “to flag and remove new U.S.-origin claims made in ad copy submitted by suppliers.” As a result, Ensor wrote, “the staff has decided not to pursue this investigation any further” (while noting that the agency reserved the right to do so in the future).
The press jumped on the story immediately. “Walmart Removes ‘Made In The USA’ Logos from Website After Government Investigation,” shouted the International Business Times. Similar headlines spewed from Forbes, The Business Insider, and others. The Washington Post at least posed a question about the company’s changes. Considering Walmart’s heavily promoted campaign to sell more products that are made in America, and to invest $250 billion in the effort over a period of 10 years, why, the Post wondered, was the Made-in-USA label “scrubbed from its website?”
But that’s pretty much where the press’s inquiry stopped. Every publication proclaimed the situation solved, with no indication of any questions about the FTC’s assurances in Ensor’s letter. Several weeks later, on November 12, Patten raised another red flag. “Unfortunately,” Patten wrote to Ensor, “Walmart misled the agency.”
Patten pointed out that Walmart had promised the FTC “that it had removed ‘Made in USA’ logos from all product listings,” along with a range of other remedies. Yet very few of these changes had occurred. Quoting the FTC’s own commentary on its rules, Patten noted that “[a] disclosure…cannot cure a false claim. As one FTC blog post put it, “what the headline giveth, the fine print cannot taketh away.” To make matters worse, Walmart’s disclaimer is sufficiently far removed from its product titles that a purchase can be made without ever seeing it.” (The FTC says that disclosures should be “as close as possible to the claim they qualify.”)
A Walmart spokesman’s final message to me was as follows: “Unfortunately we won’t be able to participate in your story.” Several days later, Walmart’s Made-in-USA search function was disabled, but the product listings remained the same.
“In short,” Patten asserts, “Walmart lied to the FTC, continues to deceive its consumers, and is trying to cover its tracks with a disclaimer that is legally and practically ineffective.” Patten and her organization’s legal director urged the FTC to take immediate measures. As of late April, 2015, no action had been taken against Walmart. And, since October, 2015, no material changes had been made to the Made-in-USA claims on Walmart’s website.
Which is not to say that Walmart has been sitting idly by. As of mid-April of 2016, one could still search Walmart’s website for products under the search term, “Made in USA,” and be given the same results. At that time, I called one of the company’s attorneys to find out how Walmart viewed this series of events. This produced an exchange of messages with Scott Markley, a Walmart spokesperson. Markley’s final message to me was as follows: “Unfortunately we won’t be able to participate in your story.” Several days later, Walmart’s Made-in-USA search function was disabled. Nonetheless, the contradictions behind the search,within Walmart.com’s individual product listings, remained the same.
If any situation begged for the golden clarity of regulatory action, I thought this was it. So I called Julia Ensor, the FTC’s attorney, and asked how Walmart’s practices squared with FTC rules. “We’re still reviewing the case,” she said. Why is it taking so long? “I can’t answer that,” she said. If the agency ultimately finds Walmart in violation, what action might it take? “I can’t answer that either,” she said. As you might expect, the rest of the interview proceeded along essentially the same plane.