Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: New York Attorney General settles deceptive marketing charges with malt beverage producer, (Mar 25, 2014)

By Linda O’Brien, J.D., LL.M.

Attorney General Eric T. Schneiderman announced today that he, 19 other Attorneys General, and the City Attorney of San Francisco reached an agreement with Phusion Projects, LLC, and its officers—Jaisen Freeman, Christopher Hunter, and Jeffrey Wright—to resolve charges that Phusion marketed and sold flavored malt beverages in violation of consumer protection and trade practice statutes. Phusion produces, markets, and sells alcoholic beverages.

Among other violations, Phusion allegedly promoted flavored malt beverages to underage persons; promoted dangerous and excessive consumption of its flavored malt beverages; failed to disclose to consumers the effects and consequences of drinking alcoholic beverages that are combined with caffeine; and, before 2011, manufactured, marketed, and sold caffeinated beverages that are unsafe. As part of the settlement agreement, Phusion has agreed to discontinue a number of practices related to the sale and promotion of its flavored malt beverages, especially those that were marketed to college students and used ads featuring actors who appeared to be underage.

As part of the settlement, entitled “Assurance of Voluntary Compliance and Voluntary Discontinuance,” Phusion agreed to reform how it markets and promotes its flavored malt beverages, including the product, Four Loko. Under the settlement agreement, Phusion agreed not to: (1) promote the misuse of alcohol; (2) promote mixing flavored malt beverages with products containing caffeine; (3) manufacture, market, sell or distribute any caffeinated alcoholic beverages; (4) provide to wholesalers, distributers, or retailers any promotional materials for caffeinated alcoholic beverages or materials that promote mixing flavored malt beverages with products containing caffeine; (5) sell, offer for sale, distribute or promote alcoholic products to underage persons; (6) hire underage persons to promote alcoholic products; (7) hire models or actors for its promotional materials who are under the age of 25 or who appear to be under the age of 21; (8) promote flavored malt beverages on school or college property, except at retail establishments licensed to sell alcoholic products; (9) use names, initials, logos, or mascots of any school, college, university, student organization, sorority, or fraternity in Phusion’s promotional materials for its alcohol products; or (10) distribute, sell, provide, or promote merchandise bearing the brand name or logo of flavored malt beverages to underage persons.

Additionally, Phusion has agreed to:

• Prevent the posting of, and promptly remove from its websites and social media, any postings that depict or describe the consumption of its caffeinated alcoholic beverages or that depict or describe the mixing of its flavored malt beverages with products containing caffeine;

• Prevent the posting of, and promptly remove from its websites and social media, any postings that depict or condone the misuse of alcohol;

• Inform distributors and retailers that its flavored malt beverages contain alcohol;

• Advise retailers to display its flavored malt beverages separate and apart from non-alcoholic products; and

• Pay $400,000 the City Attorney of San Francisco and the State Attorneys General who are signatories to the settlement.

“As numerous regulators and the Food and Drug Administration have rightly concluded, alcoholic energy drinks are dangerous—especially for the teenagers and young adults they target,” Attorney General Schneiderman said. “Today’s agreement ensures that one company will no longer market a dangerous product to youth, but we must remain vigilant and continue to seek out dangerous marketing tactics and unsafe beverages that are increasingly sold in stores across the country. I thank my partners in law enforcement for their work in this case and look forward to a continued partnership to promote public health.”

The Attorneys General of New York, Arizona, Connecticut, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, and Washington, along with the City Attorney of San Francisco, participated in the settlement.

Companies: Phusion Projects, LLC

News: Advertising ConsumerProtection NewYorkNews