How the FTC's settlement will change Four Loko's label and packaging

A final FTC order will lead to big changes in the marketing of the Four Loko malt beverage and offers insights into the notice-and-comment process for all proposed administrative settlements.

The FTC originally sued Phusion Projects, LLC, and its principal owners for falsely claiming that a 23.5-ounce can of the stuff contains the alcohol equivalent of one or two 12-ounce beers and that a person could safely drink a whole can on a single occasion.  In truth, downing the fruit-flavored beverage in one sitting is more akin to drinking four or five beers at once.

Under the modified final order, the company will have to seek approval from the Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (the TTB) to put an Alcohol Facts panel on containers of Four Loko or any other flavored malt beverage that has more than two servings of alcohol, as defined by the U.S. Dietary Guidelines.

What’s on that Alcohol Facts panel?  The container size, alcohol by volume, number of servings in the container, and serving size in fluid ounces.  It also includes the statement, “According to the U.S. Dietary Guidelines, a serving contains 0.6 ounces of pure alcohol.”  Once it gets TTB’s OK, Phusion has 90 days to put the panel on its product.

Another key part of the settlement:  For all flavored malt beverages containing more than 2½ servings of alcohol, Phusion has to make the container resealable.  The company has six months to make that happen. 

How does the notice-and-comment period factor into the Four Loko story?  In response to its initial proposed settlement, the FTC received more than 250 comments, including a write-in campaign about the product.  The modified order differs from the initial proposal in two ways.  First, the initial proposal would have required Phusion to include disclosures on flavored malt beverages containing more than 2½ servings of alcohol.  That’s now 2 servings.  Second, the proposed order originally would have required a front-of-can disclosure comparing the amount of alcohol in Four Loko to the amount in regular beers.  Now the company has to include the Alcohol Facts panel, subject to TTB approval.

The FTC also published its response to commenters, noting that its doesn’t have the legal authority to ban Four Loko or force the company to limit the beverage's size or potency.

Some noteworthy points about the settlement:

• The disclosure required by the order will give consumers important information about what’s in the can; and
   
• The disclosure is consistent with public health community standards, which define a "serving" of a product to contain 0.6 ounces of pure alcohol, and refers to the definition of a serving in the U.S. Dietary Guidelines.

Another important take-away is the careful consideration the FTC gave to the comments people filed about the proposed administrative settlement.  So in response to the question, "Is it worth the effort to file a comment with the FTC?" the answer is a big-time yes.  The online system makes it a procedural breeze.

Looking for more information?  The BCP Business Center features special sections for selected industries.  Bookmark the Alcohol page to follow other FTC developments.