Analysis of Proposed Consent Order to Aid Public Comment
In the Matter of Cycra Inc. and Steven Chadwick James, a/k/a Chad James, individually and
as an officer of Cycra Inc.
File No. 2323007

The Federal Trade Commission (“FTC” or “Commission”) has accepted, subject to final
approval, an agreement containing a consent order from Cycra Inc. and Steven Chadwick James
(“Respondents”).

The proposed consent order has been placed on the public record for thirty (30) days for
receipt of comments by interested persons. Comments received during this period will become
part of the public record. After thirty (30) days, the Commission will again review the
agreement and the comments received and decide whether it should withdraw from the
agreement or make final the agreement’s proposed order.

This matter involves Respondents’ labeling and advertising of motorcycle, motocross,
and all-terrain vehicle products as “Made in USA.” According to the FTC’s complaint,
Respondents labeled and advertised their products as made in the United States even though, in
numerous instances, those products were wholly imported or contained significant imported
content. Based on the foregoing, the complaint alleges Respondents violated Section 5 of the
Federal Trade Commission Act, 15 U.S.C. § 45(a), and Section 323.2 of the Made in USA
Labeling Rule, 16 C.F.R. § 323.2.

The proposed consent order contains provisions designed to prevent Respondents from
engaging in similar acts and practices in the future. Consistent with the FTC’s Made in USA
Labeling Rule, 16 C.F.R. Part 323, and its Enforcement Policy Statement on U.S.-Origin Claims,
Part I prohibits Respondents from making U.S.-origin claims for their products unless: (1) the
final assembly or processing of the product occurs in the United States, all significant processing
that goes into the product occurs in the United States, and all or virtually all ingredients or
components of the product are made and sourced in the United States; (2) a clear and
conspicuous qualification appears immediately adjacent to the representation that accurately
conveys the extent to which the product contains foreign parts, ingredients or components,
and/or processing; or (3) for a claim that a product is assembled in the United States, the product
is last substantially transformed in the United States, the product’s principal assembly takes place
in the United States, and United States assembly operations are substantial.

Part II prohibits Respondents from making any representation about the country of origin
of a product or service, unless the representation is not misleading and Respondents have a
reasonable basis substantiating it.

Parts III through V are monetary provisions. Part IV imposes a judgment of $872,577
and partially suspends that judgment on the basis of the Respondents’ sworn financial
statements. If the Commission concludes any Respondent made a material misrepresentation or
omission in that Respondent’s sworn financial statement, the suspension as to that Respondent is
lifted and the full judgment is immediately due. Part IV includes additional monetary provisions

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relating to collections. Part V requires Respondents to provide sufficient customer information
to enable the Commission to administer consumer redress, if appropriate.

Part VI is a notice provision requiring Respondents to identify and notify certain
consumers of the FTC’s action within 30 days after the issuance of the order, or within 30 days
of the consumer’s identification, if identified later. Respondents are also required to submit
reports regarding their notification program.

Parts VII through VIII are reporting and compliance provisions. Part VII requires
Respondents to acknowledge receipt of the order, to provide a copy of the order to certain
current and future principals, officers, directors, and employees, and to obtain an
acknowledgement from each such person that they have received a copy of the order. Part VIII
requires Respondents to file a compliance report within one year after the order becomes final
and to notify the Commission within 14 days of certain changes that would affect compliance
with the order. Part IX requires Respondents to maintain certain records, including records
necessary to demonstrate compliance with the order. Part X requires Respondents to submit
additional compliance reports when requested by the Commission and to permit the Commission
or its representatives to interview Respondents’ personnel.

Finally, Part XI is a “sunset” provision, terminating the order after twenty (20) years,
with certain exceptions.

The purpose of this analysis is to aid public comment on the proposed order. It is not

intended to constitute an official interpretation of the complaint or proposed order, or to modify
in any way the proposed order’s terms.

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