FTC Approves Modified Final Order Settling Charges against Marketer of Four Loko Malt Beverage

Following a public comment period, the Federal Trade Commission has finalized a modified Order settling charges against Phusion Projects, LLC, and its principals for falsely claiming that a 23.5-ounce can of Four Loko contains the alcohol equivalent of one or two regular 12-ounce beers, and that a consumer could drink one entire can safely on a single occasion.

13 Feb 2013 --- 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. 

The order also requires that all of Phusion’s flavored malt beverages containing more than two and a half servings of alcohol be made resealable within six months.

The original proposed order against Phusion Projects LLC and principals Jaisen Freeman, Christopher Hunter, and Jeffrey Wright was accepted for public comment on October 3, 2011.  The FTC received more than 250 public comments about that proposal.  The final Order, which was modified in response to comments received, differs from the proposed order in these respects:

• The final order requires that all of Phusion’s flavored malt beverages containing more than two servings of alcohol include disclosures, whereas the proposed order required disclosures on products with more than two and a half servings.
• The modified final Order requires a back-of-can “Alcohol Facts” panel, subject to TTB approval, whereas the proposed order required a front-of-can disclosure comparing the amount of alcohol in Four Loko to the amount in regular beers.

The agency’s response to the commenters notes that it does not have jurisdiction to ban Four Loko, or force the company to limit its size or alcohol content.

The Commission vote approving the final Order was 3-0-2, with Chairman Jon Leibowitz and Commissioner Joshua D. Wright not participating.

Source: FTC