New Balance might have to pay for those shoes that weren’t made in America.
A California federal judge gave the green light to a preliminary approval of a settlement between the activewear company and a group of California consumers who accused New Balance Athletics of selling sneakers marketed as “Made in the USA.” But they said the shoes were actually made abroad — at least part of them anyway.
“New Balance exploits the ‘Made in the USA’ claim in order to create a brand image that it is an American company that employs American factory workers who produce American-made products,” the original suit, which was filed in early 2017, reads. The accusations against the private company include violation of California false advertising law, negligent misrepresentation and unfair competition.
On the New Balance web site, the company says it has been manufacturing its shoes in the U.S. for more than three-quarters of a century; its shoes contain “a domestic value of 70 percent or greater.”
“New Balance always has, and always will be, committed to making shoes in the U.S.,” the web site says.
But a group of California consumers said the 70 percent mark was deceptive and akin to consumer fraud.
“Put differently, New Balance admits that it has a common policy of advertising that its shoes are Made in the USA even when up to 30 percent of the value of the shoes is attributable to foreign-made components and/or labor,” the complaint reads.
According to the suit, New Balance sold hundreds of thousands of shoes in California falsely labeled “Made in the USA” and charged shoppers inflated prices in the process.
New Balance’s custom Made in the USA sneakers retail for between $164.99 and $369.99, while its regular lines can be bought for less than $100.
“Consumers are more inclined to purchase American-made products and they will pay more for them. New Balance is well aware of this, and it intentionally disseminates deceptive Made in the USA claims in order to capitalize on strong consumer sentiment favoring American products,” the complaint reads.
“The label on ‘Made in the USA’ shoes misled the consumers to believe that the shoes were American-made, when a significant part of the materials and labor were derived from abroad,” the complaint states.
Earlier this month a judge granted preliminary approval of the $750,000 settlement that was reached between the two parties. A final approval hearing is set for June.
New Balance did not respond to a request for comment. The Boston-based company is projecting sales of more than $7 billion globally by 2023.