Officials urge FTC to toughen settlement with maker of high-alcohol drink

Top law enforcement officials from nearly three dozen states, including Maryland, have urged the Federal Trade Commission to toughen its proposed settlement with the maker of a sweet alcoholic drink called Four Loko and investigate other companies that make similar high-alcohol drinks.

In October, the FTC announced that Phusion Projects would disclose on the labels of its 23.5-ounce Four Loko malt beverages that these drinks contain as much alcohol as four to five regular 12-ounce beers. The agency had accused the company of misrepresenting the amount of alcohol in those supersize cans. Phusion Projects has denied the allegation.

In a letter to the agency last month, attorneys general from 33 states said that adding a disclosure to the label would not go far enough in the fight against binge drinking, which accounts for more than half of the nation’s 79,000 annual alcohol-related deaths. Instead, the officials said the FTC should consider ordering the company to limit the alcohol in its supersize cans.

These law enforcement officials, joined by consumer advocates and industry trade groups, also said the FTC proposal may backfire and encourage more underage drinking by advertising that these beverages are a cheap way to get intoxicated.

“The proposed labeling requirement practically announces, ‘Four beers are here for the price of one,’ ” Samantha Graff, a senior lawyer at Public Health Law & Policy, wrote in a letter her group submitted to the FTC this month.

Federal regulators started cracking down on Phusion Projects and others that sell similar fruity-tasting, high-alcohol malt beverages after claims that the drinks were linked to the deaths of teenagers in several states in recent years, including a 15-year-old Centreville boy who died more than a year ago after allegedly drinking two cans of Four Loko.

In November, the FTC and the Food and Drug Administration warned Phusion and three other alcoholic malt beverage makers that the caffeine and other stimulants added to their drinks were dangerous because “caffeine can mask the sense of intoxication.” All four companies removed the stimulants from the products at issue.

More recently, the FTC turned its attention to the alcohol content of the 23.5-ounce Four Loko malt beverages. The FTC alleged that Phusion’s marketing was deceptive because it suggested that the amount of alcohol in those cans was the equivalent of one to two 12-ounce cans of beer — instead of four to five cans. For instance, Phusion urged merchants to stock the large cans with refrigerated single-serve alcoholic beverages, the FTC said.

In the settlement, which has yet to be finalized, Phusion agreed to disclose the alcoholic content on the labels. It also agreed to repackage the carbonated beverages in resealable containers to discourage consumers from drinking an entire can at one go.

However, the FTC did not bar Phusion from asking retailers to display the supersize cans alongside lower-alcohol single-serve beverages. The state attorneys general, led by Douglas F. Gansler (D-Md.) and Mark Shurtleff (R-Utah), said the FTC should consider limiting the malt beverage cans to two servings of alcohol.

They also raised concerns about how the disclosure labels would influence buying decisions, something that industry trade groups also flagged. Industry officials also said the settlement undermines federal laws that grant the states primary authority to regulate alcohol distribution.

“The label contemplated by the proposed settlement could actually serve to entice consumers, especially younger ones seeking high-alcohol, low-priced products, to possibly over consume these products,” the National Beer Wholesalers Association said in its comments to the FTC. “For this reason, states have long attempted to discourage certain label disclosures that would lead to ‘strength wars.’ ”

The FTC has received more than 250 comments about its proposal. The agency has declined to comment on the feedback it has received except to say it will consider it carefully before finalizing the settlement. The agency has declined to comment on whether it will take action against other malt beverage makers.

Dina ElBoghdady covers housing policy for The Washington Post.

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