FTC Orders Beverage Company to Change Labeling

In early October 2011, the Federal Trade Commission (“FTC”) brought charges against Phusion Projects, LLC, the maker and distributor of popular malt beverage Four Loko, alleging deceptive marketing practices for failing to properly disclose the alcohol content in its beverages.  In particular, the FTC focuses on the Four Loko labeling and associated marketing materials which claim that a 23.5-ounce can of Four Loko contains the alcohol equivalent of one or two regular 12-ounce beers.  In actuality, the alcohol content is close to four to five servings of alcohol, as defined by U.S. Dietary Guidelines.newklein

Earlier this week, following an extended period of industry comments, the FTC finalized a modified Order settling charges against Phusion Projects, LLC.  The FTC website describes the details contained in the final, modified Order:

Under the modified final Order, Phusion Projects is required to seek approval from the U.S. Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau  (“TTB”) to put an Alcohol Facts panel on containers of Four Loko or any other flavored malt beverage containing more than two servings of alcohol, as  defined by the U.S. Dietary Guidelines.  This Alcohol Facts disclosure is truthful and non-misleading, and together with the other relief provided in the order, corrects the deception alleged in the complaint.  The Alcohol Facts panel sets forth the container size, percentage alcohol by volume, number of servings in the container, and serving size in fluid ounces.  It also contains the statement, “According to the U.S. Dietary Guidelines, a serving contains 0.6 ounces of pure alcohol.”  Upon receipt of TTB approval, Phusion has 90 days to place the Alcohol Facts panel on its products.

As the Phusion case makes clear, it is essential that food and beverage marketers take measures to ensure that their packaging and marketing materials are accurate, and the necessary disclosures complete.  Entities that fail to comply with state and federal deceptive marketing laws could find themselves facing regulatory action from the FTC, or state regulatory bodies, which could result in significant fines being levied, as well as other costs.

If you are interested in learning more about this topic or need to review your marketing materials and/or packaging based on this FTC settlement, please contact us at your convenience.

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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