Watchdog, state AGs target Four Loko agreement

WASHINGTON (Legal Newsline) - A self-described "alcohol industry watchdog" has come out against a settlement agreement the Federal Trade Commission reached last month with the marketers of Four Loko.

Alcohol Justice, formerly the Marin Institute, sent a letter to the FTC on Oct. 19 saying it had "serious concerns" about the agreement.

Now, the group is asking supporters to sign an online petition, urging the commission to withdraw the agreement and require "much stronger" changes from Phusion Projects LLC and other so-called "alcopop" producers.

On Oct. 3, the FTC announced that the marketers of Four Loko agreed to re-label and repackage the supersized, high-alcohol, fruit-flavored, carbonated malt beverage to resolve the commission's charges of deceptive advertising.

The FTC alleged that Phusion and its principals falsely claimed that a 23.5-ounce can of the drink contains the alcohol equivalent to one or two regular 12-ounce beers, and that a consumer could drink one can, in its entirety, safely.

The commission found the opposite: one can of Four Loko contains as much alcohol as four to five 12-ounce cans of regular beer and is not safe to drink in a single sitting.

In fact, consuming a single can of the drink on a single occasion constitutes "binge drinking," the FTC said. "Binge drinking" is defined by health officials as men drinking five -- and women drinking four -- or more standard alcoholic drinks in about two hours.

Under the settlement agreement with the FTC, Phusion now is required to include disclosures on containers of Four Loko, or any other flavored malt beverage containing more alcohol than two and a half regular beers, stating how much alcohol -- compared to the amount of alcohol found in regular beer -- is in the drink. It also specifies the location and appearance of the disclosure.

Also, starting six months after the agreement takes effect, Phusion is required to use only resealable containers for flavored malt beverages that have more alcohol than the equivalent of two and a half regular beers.

The agreement also bars Phusion from misrepresenting the alcohol content of any beverage, and from depicting people drinking directly from the container of any product containing more alcohol than that found in two and a half regular beers.

But Alcohol Justice says the settlement agreement isn't enough.

"Given the gravity of these allegations, we are disappointed with the FTC's proposed solution to Phusion Projects' pattern of deceptive marketing," the group wrote in its three-page letter.

"The agreement sets forth labeling and container requirements but exempts Phusion varieties that contain less than the alcohol contained in 2.5 beers, thus giving the false impression that 2.5 beers is an acceptable amount of alcohol to consume in one sitting."

Such a standard defies current federal government drinking guidelines, Alcohol Justice argues.

"The Dietary Guidelines for Americans recommend no more than 2 drinks per day for men and one per day for women. Decades of research -- much of it funded by federal agencies -- continues to show that consuming more than these recommended amounts can lead to serious adverse health and safety outcomes," the group wrote.

"Moreover, these relatively new products warrant especially conservative drink size standards
given their particular characteristics and youth appeal. With all the added sugar and flavors masking the flavor of alcohol, a drinkers' ability to self-regulate intake is markedly inhibited."

As for the FTC's proposed requirement that the beverage come in resealable containers, Alcohol Justice argues that it is based "neither on science nor common sense."

"We have no evidence that making the can resealable (which is not even specifically defined in the agreement) will discourage drinking the entire container at one time," it wrote. "These are not containers of milk or juice that drinkers put back in the fridge after pouring a glass. To the contrary, these are products sold largely from coolers in convenience stores, intended for immediate consumption, just like a can of Coke or Red Bull.

"It's absurd to even imagine how a cap will deter youth from drinking an entire container at once. Again, without conducting any research, such a remedy seems wildly premature."

The FTC, in response to an influx of comments opposing the agreement, has extended the public comment period by 30 days to Dec. 2.

Last week, 36 state attorneys general and legal officers sent a letter to FTC Secretary Donald Clark asking the commission to take "swift, forceful action" against Phusion.

In their letter, the attorneys general described Four Loko as a "disarmingly sweet fruit-flavored product in brightly colored ready-to-drink containers."

The attorneys general requested that the FTC order Phusion to halt their deceptive advertising of the drink and to limit flavored malt beverage containers to two servings of alcohol.

"The marketing of these high-alcohol beverages encourages young people to consume the entire large container in one sitting," West Virginia Attorney General Darrell McGraw said in a statement.

"Not only can binge drinking lead to dangerous health and other consequences for the individual, it also inflicts huge economic costs on our society."

The Food and Drug Administration already forced Phusion to remove caffeine and other stimulants from the drink, which was originally marketed as an alcoholic energy drink that came in eight fruity flavors.

Michelle Minton wrote on OpenMarket.org, a blog of the Competitive Enterprise Institute, that there is no need for the government to tell consumers they're "too dumb to understand" how bad it is to drink multiple cans of the beverage.

Minton argues that there are already laws preventing minors from purchasing alcoholic beverages, and that consumers have a right to purchase the drink if they want.

In addition, asking a federal agency like the FTC to regulate the content of alcoholic beverages is a "pretty big violation" of the 21st Amendment of the Constitution, Minton says.

"Yes, the FTC is vested with power to regulate labels and advertisements while the FDA approves food and drink for safety, but limiting the contents of alcoholic beverages -- whether it be size of can or amount of alcohol -- is a state's right," she wrote.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.