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March 25, 2014

Miller, Attorneys General Settle with Phusion Over "Four Loko"

Agreement addresses manufacturing & marketing of flavored malt beverages

(DES MOINES, Iowa) The company that produces flavored malt beverage “Four Loko” will change how it manufactures and markets its products under an agreement with Attorney General Tom Miller and a group of 19 other state attorneys general and the San Francisco city attorney.

Phusion Projects, LLC, of Chicago, and its principals, have agreed not to manufacture caffeinated alcoholic beverages, and also agree to reform how the company markets and promotes its non-caffeinated flavored malt beverages, including Four Loko.  As part of the agreement, Phusion will pay $400,000, including about $18,000 to Iowa’s Consumer Education and Litigation Fund.

“This agreement stops the false messaging to young people we’ve seen from Phusion in the past that that they can safely drink full super-sized cans of high-alcohol, fruit-flavored drinks, either with or without added caffeine,” Miller said.  “Our agreement sends a strong message not only to Phusion, but also to others that it’s not okay to base your business model on young people binge drinking.”

The agreement, through an Assurance of Voluntary Compliance and Voluntary Discontinuance, resolves allegations that Phusion marketed and sold flavored malt beverages, namely “Four Loko,” in violation of consumer protection and trade practice statutes.

Attorneys general alleged that Phusion promoted Four Loko to underage persons, promoted dangerous and excessive consumption of the product, promoted the misuse of alcohol, and failed to disclose to consumers the effects and consequences of drinking alcoholic beverages combined with caffeine.  Phusion denies the allegations.

In November 2010, after the Federal Trade Commission issued a warning letter to Phusion regarding safety risks posed by Four Loko, the company removed caffeine, along with guarana and taurine, from its malt beverage drinks.

The new settlement with attorneys general addresses Phusion’s practice of manufacturing, marketing, and selling unsafe and adulterated caffeinated alcoholic beverages prior to the FDA’s November 2010 letter warning Phusion that caffeinated Four Loko is an unsafe product.

Under the agreement, Phusion agrees not to:

  • Promote binge drinking, drinking while driving, consuming an alcoholic beverage by means of a rapid ingestion technique or device, or underage drinking;

  • Promote to consumers, wholesalers, distributers, or marketers mixing its flavored malt beverages with products containing caffeine;

  • Sell, offer for sale, distribute or promote alcoholic products to underage persons;

  • Hire underage persons, or actors under the age of 25, to promote alcohol products;

  • Hire models or actors for its promotional materials that are under the age of 25 or that appear to be under the age of 21;

  • Promote flavored malt beverages on school or college property, except at retail establishments licensed to sell alcoholic products;

  • 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

  • Distribute, sell, provide or promote merchandise bearing the brand name or logo of flavored malt beverages to underage persons.

Additionally, Phusion has also agrees 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 alcohol beverages, the mixing of its flavored malt beverages with products containing caffeine, or 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 the state attorneys general that are signatories to the settlement and the city attorney of San Francisco $400,000.00.


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