What Utah Company Fined $212K Really Thinks About FTC’s Made in America Crusade

The Federal Trade Commission (FTC) is sending over 11,000 checks and 66 PayPal payments totaling more than $176,000 to people who bought clothing and accessories from Lions Not Sheep, the company it discovered making false Made in America claims.

Each payment is $15.30. FTC said the Utah-based company used deceptive "Made in USA" labels and advertising on products that came from other countries.

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The FTC initially took action against Lions Not Sheep and founding CEO Sean Whalen last May for falsely claiming that its apparel is made in the States. According to the FTC's complaint, the company added phony "Made in USA" labels to clothing and accessories originating from China and elsewhere.

"Companies that slap phony Made in USA labels on imported goods are cheating their customers and undercutting honest businesses, and we will hold those companies and their executives accountable for their misconduct," Sam Levine, director of the FTC's bureau of consumer protection, said at the time. "American consumers have the right to know the truth about where their clothes and accessories are made."

The complaint alleged that in October 2020, Whalen published a video of himself on his social media accounts—where Lions Not Sheep heavily marketed its products as USA-made—with the title "MADE IN AMERICA!" alongside a Chinese flag. In the video, Whalen said he could conceal the fact that his shirts are made in China by ripping out the origin tags and replacing them with tags stating that the merchandise was produced domestically.

Eight months ago, Whalen made a YouTube video titled "Message for our tribe" in response to the FTC case and the "absolutely ridiculous barrage of media attacks against me and against Lions Not Sheep."

In the video, Whalen claims he purchased blanks from Next Level Apparel, which counters by claiming Lions Not Sheep takes out the tag in a process known as "white labeling."

"It's a tag or stamp from whatever the company is, whatever patriotic, 2A [Second Amendment], God-fearing, gun totin’, freaking patriot company that you’re following, they probably have their own information in here," Whalen said in the video, referring to what consumers see on an apparel tag. "So literally what they will do is they’ll tear out the tag. They’ll take the tag out, which again is completely legit, completely legal, regulated by the FTC, and they will replace it with their own, either screen print or heat transfer."

Whalen alleged that Lions Not Sheep didn't do this when the company started in 2016; it was expensive and he was "trying to work on the company, and not necessarily the manufacturing the garments," he said. The first few hundred thousand garments that Lions Not Sheep made included Next Level tags. "[C]hances are" shirts purchased over the past two years contain a Next Level or District tag, which has "made in Nicaragua" written on the label, Whalen said.

"So to kind of squash some of the bulls*** that's been floating around here, No. 1 I did a video in 2020 telling people that I buy blanks, that I buy blanks from wholesalers and different companies all over the country," Whalen said in the video. "All of our Lions Not Sheep apparel comes from blanks, and we get them from multiple different companies."

In 2021, Whalen connected with an American company owned and operated by a retired Navy seal with the intention of putting its own labels inside of his company's shirts. But for a shirt to say Made in the USA, "prior to August of last year, of 2021, what you had to do was have all or virtually all of the manufacturing and the production of the garment happen here in American soil," Whalen said. He went on to say, "if you’re wearing a shirt that says made in America, there's a high probability, as in like a 99 percent chance that your garment was made somewhere else. The actual shirt, the sewing of it, the cotton, the spinning of it, was actually made someplace else."

He seems to be referring to President Joe Biden's Made in America executive order signed in January 2021, which aimed to increase the amount of federal spending on products made by American companies. The order includes two types of Made in America claims: qualified and unqualified. "Unqualified" refers to something produced or assembled in the U.S. with all or nearly all domestic materials, while "qualified" allows for more foreign materials. Products whose country of origin is not the U.S. can't be classified as Made in America.

Whalen claims he wasn't "hitting refresh" to make sure Lions Not Sheep remained in FTC compliance. "I don't know very many CEOs or business owners that are on government websites hitting refresh all day long reading lengthy, very ambiguous documents wondering if they’re still in compliance," he said in the video.

The founder pointed to a six-week period where he claims he didn't realize Lions Not Sheep was out of compliance. In October 2021, the FTC alerted Lions Not Sheep about the breach seeking further evidence to confirm or dispute its product origins. Whalen accused the FTC of coming after Lions Not Sheep because of the company's opposing political stance, and claims his company had a "target on our back" because it sold shirts that said #FJB, the hashtag right-wing conservatives use on social media as shorthand for "F*** Joe Biden". The FTC subsequently fined Lions Not Sheep $212,000.

"Now, understanding that what we did come out of compliance for those six weeks period of time, what the FTC has chosen to do, which is fairly egregious and quite frankly, it's absolutely just completely ridiculous, is state that our company is basically defrauding everybody that we’ve been tearing off Chinese tags," Whalen said in the video. "Again, we’ve never had a Chinese tag on any of our shirts, and basically duping the marketplace from day one, which is complete and utter bulls***, because at the end of the day, the small window of time that we were out of compliance, I owned up to and said ‘I will pay the fine’."

Lions Not Sheep did not respond to Sourcing Journal's requests for comment.

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