WASHINGTON – The Federal Trade Commission has referred a complaint to the federal Department of Justice alleging Adam J. Harmon and two companies he controls falsely told consumers that personal protective equipment they marketed during the pandemic, as well as light fixtures they sold, were made in the United States.
The FTC charged Harmon and his two companies, Axis LED Group and ALG-Health, with violating the COVID-19 Consumer Protection Act, the Made in USA Labeling Rule and the FTC Act.
The agency’s proposed order would stop them from making deceptive claims that products were “Made in USA” – or, that because they were made in the USA, they provided superior protection from COVID-19. The order also would require them to pay a civil penalty of more than $150,000 for their deceptive claims.
“ALG and its CEO slapped the ‘Made in USA’ label on masks that were made overseas,” said Sam Levine, director of the FTC’s Bureau of Consumer Protection. “As Americans struggle to obtain safe, authentic personal protective equipment, the commission will use every tool we have to root out false claims and phony labels.”
With the onset of the COVID-19 pandemic in early 2020, Harmon began operating under the name ALG-Health, selling PPE such as masks, gowns, and gloves.
According to the complaint, Harmon and ALG made numerous false and misleading claims that their PPE products were all or virtually all made in the U.S., even though the products were wholly imported or incorporated significant imported materials or subcomponents. These claims and other false statements – including that the defendants’ products were U.S.-origin respirators, certified by the National Institute for Occupational Safety – violated the COVID-19 Consumer Protection Act, the complaint alleges. Specifically, the defendants harmed consumers by:
Deceiving consumers about the country of origin of their products.
Deceiving consumers about the efficacy of their COVID-19 PPE products. The defendants falsely claimed to consumers that their PPE products were superior due their country of origin.
The proposed order settling the FTC’s complaint against Harmon, ALG-Health and Axis LED Group prohibits the conduct alleged in the complaint. Harmon and his companies must stop making deceptive labeling and advertising claims, and provide substantiation for all ‘Made in USA’ and COVID-19-related claims.
They also must pay a $157,683 civil penalty, which is due immediately, and are subject to a $2.8 million redress judgment, which is suspended due to their inability to pay. Should the FTC discover that the defendants have misstated the value of any assets or failed to disclose them, the agency will seek to have the suspension lifted and the full judgment would come due immediately.
Last August the commission voted to finalize the Made in USA Labeling Rule, which enables the agency to seek civil penalties from companies that make false claims. This is the FTC’s second action this year to enforce the rule.
The first was against Florida-based Lithionics Battery, which designs and sells battery products for recreational vehicles, amusement park rides, marine applications, and low-speed electric vehicles. Lithionics illegally misrepresented that its lithium-ion cells are made in the U.S. when in fact those products were primarily made overseas. The FTC imposed civil penalties of more than $100,000 against the company.
The FTC also is taking aggressive action to combat COVID-19 fraud. The agency has brought more than a dozen cases against COVID-19 predators under the COVID-19 Consumer Protection Act.