Can a California Business Be Sued for Calling a Product Made in USA?

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

Yes, if foreign parts make up too much of the product's value. Business and Professions Code section 17533.7 permits a Made in U.S.A. label on merchandise made in the United States only when its foreign articles, units, or parts are no more than 5 percent of the final wholesale value. The limit is 10 percent when the manufacturer shows a part cannot be made or obtained domestically. Assembly in California does not satisfy the test if imported parts exceed those limits. Kolmogorov Law, P.C. defends California businesses against these claims.

Call (909) 235-6116 or contact us online to discuss a demand or lawsuit over a country-of-origin claim.

What section 17533.7 says

The rule is written broadly. It covers merchandise sold or offered for sale in California that carries the words "Made in U.S.A.," "Made in America," "U.S.A.," or similar words, on the product or its container. Selling it is unlawful if the merchandise, or any article, unit, or part of it, has been entirely or substantially made, manufactured, or produced outside the United States. (Bus. & Prof. Code, § 17533.7, subd. (a).)

Read literally, one substantially foreign part is enough. The exceptions are what allow the label on a product with some foreign content. The current text took effect on January 1, 2016.

The 5 percent and 10 percent exceptions

The section does not apply to merchandise made in the United States if all of its foreign articles, units, or parts together are not more than 5 percent of the final wholesale value of the manufactured product. (Bus. & Prof. Code, § 17533.7, subd. (b).)

A second exception allows up to 10 percent. The manufacturer must show that it can neither produce the part in the United States nor obtain it from a domestic source. That determination may not be based on the cost of the part. (Bus. & Prof. Code, § 17533.7, subd. (c).)

Consider a company that assembles a countertop appliance in California. The motor and the control board are imported, and together they account for 30 percent of the wholesale price. An unqualified Made in USA label on that product falls outside both exceptions.

The section does not define "final wholesale value" or say how to calculate it. Which price list applies, and which costs count as a foreign part, are questions the text leaves open.

Two geographic limits appear in the text. The section does not apply to merchandise sold for resale to consumers outside California. Merchandise sold or offered outside California is not mislabeled if the label conforms to the law of the place of sale. (Bus. & Prof. Code, § 17533.7, subds. (d), (e).)

How the federal rule differs

The Federal Trade Commission uses a different yardstick. Under its rule, labeling a product as Made in the United States is an unfair or deceptive practice unless three things are true. Final assembly or processing occurs in the United States. All significant processing occurs here. And all or virtually all ingredients or components are made and sourced here. (16 C.F.R. § 323.2.)

California counts percentages of wholesale value. The federal rule asks about "all or virtually all." A seller with national distribution has to consider both.

Who sues, and what they can recover

Consumers. The California Supreme Court has held that buyers who alleged they relied on a Made in U.S.A. label, and would not otherwise have bought the product, had standing under the Unfair Competition Law. They did not need to allege that the product was defective or worth less than they paid. (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 327-331.) Under the false advertising statutes, a court may enjoin the practice and order restoration of money acquired through it. A private plaintiff must have suffered injury in fact and lost money or property. (Bus. & Prof. Code, § 17535.)

Consumers may also invoke the Consumers Legal Remedies Act, which lists deceptive representations or designations of geographic origin among its prohibited practices. (Civ. Code, § 1770, subd. (a)(4).) A damages claim under that Act begins with the notice described on our CLRA demand letter page.

Public prosecutors. The Attorney General, a district attorney, county counsel, or a city attorney may seek a civil penalty of up to $2,500 for each violation. (Bus. & Prof. Code, § 17536, subd. (a).) A violation of the chapter is also a misdemeanor. (Bus. & Prof. Code, § 17534.) Our work is the civil claim.

Competitors. A rival that loses sales to a false origin claim has its own remedies, covered on our page about false advertising by a competitor. A complaint may also plead the Unfair Competition Law.

The records that decide the case

A bill of materials for each product, showing the country of origin and cost of every part.
Wholesale price lists for the period in dispute.
Supplier declarations of origin.
Evidence that a part could not be made or sourced domestically, on grounds other than cost.
Every version of the label, the packaging, and the online listing.

Qualified statements raise a separate question. Whether "assembled in USA" or a similar phrase counts as "similar words" is not answered by the text of the statute.

What to do when the demand arrives

Preserve the label history and the sourcing records before anything changes. Our litigation hold page explains the duty. Calculate the foreign-content percentage for each product named, and do it before any response goes out. If the letter is a CLRA notice, its 30 days are already running.

A demand that speaks for all purchasers should be read with our page on a business named in a class action.

What to bring to the first meeting

The demand letter or complaint.
The labels, packaging, and web pages for each product named.
Bills of materials and supplier origin records.
Wholesale pricing for the relevant period.
Sales figures for California.

Frequently asked questions

We assemble our product in California with some imported parts. Can we be sued for calling it Made in USA?

Yes, if the imported parts exceed the statutory limits. Under California Business and Professions Code section 17533.7, a Made in U.S.A. label is allowed on merchandise made here only if foreign articles, units, or parts are no more than 5 percent of the final wholesale value. The ceiling is 10 percent for parts the manufacturer shows cannot be made or obtained in the United States.

What percentage of foreign parts does California allow for a Made in USA label?

California allows foreign articles, units, or parts totaling not more than 5 percent of the product's final wholesale value. The figure rises to 10 percent only if the manufacturer shows it can neither produce the part in the United States nor obtain it from a domestic source. That showing may not be based on the cost of the part.

Is the California Made in USA standard different from the FTC rule?

Yes. California's statute uses percentages of final wholesale value. The Federal Trade Commission's rule, 16 C.F.R. section 323.2, treats a Made in the United States label as deceptive unless final assembly or processing and all significant processing occur in the United States. All or virtually all ingredients or components must also be made and sourced here. A product sold in California should be measured against both.

Who can sue over a false Made in USA label in California?

Public prosecutors may seek injunctions and civil penalties of up to $2,500 per violation under California's false advertising statutes. A private person may sue if he or she suffered injury in fact and lost money or property because of the violation. The California Supreme Court has held that a buyer who relied on the label, and would not otherwise have bought the product, meets that test.

One imported component is not manufactured anywhere in the United States. Does that change what we can put on the label?

It can. California Business and Professions Code section 17533.7, subdivision (c), raises the foreign-content ceiling from 5 percent to 10 percent of final wholesale value. The manufacturer must show it can neither produce the part domestically nor obtain it from a domestic source. The showing cannot rest on cost. Above 10 percent, the exception does not apply.

Talk to a California business litigation attorney

If your business has received a demand or been sued over a Made in USA claim, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located in Irvine, California, and represents companies and their owners in the state and federal courts in California.

This page provides general information about California and federal law and is not legal advice. Outcomes depend on the product, the label, and the court.