Four Loko Maker Agrees to Marketing Limits in AG Settlement

CHICAGO—The maker of Four Loko, the flavored alcoholic beverage, has reached an agreement with 19 state attorneys general and San Francisco City Attorney Dennis Herrera to restrict marketing of its products in a move aimed to protect youngsters.

Phusion Projects, LLC has agreed to refrain from marketing its fruit-flavored drinks on college campuses, cease marketing practices that promote excessive or rapid consumption of alcohol, and refrain from advertising that depicts underage drinkers, Herrera announced.

Chicago-based Phusion, which sells its beverages in 48 states, also has agreed to pay a $400,000 fine.

In 2010, the company agreed to remove caffeine, guarana and taurine from Four Loko after receiving a warning letter from the U.S. Food and Drug Administration (FDA), which said peer-reviewed studies suggest consumption of beverages containing caffeine and alcohol is associated with risky behaviors. As part of the written deal with Herrera and the state attorneys general, Phusion agreed not to manufacture caffeinated alcoholic beverages in the future.

Herrera said the agreement resolves investigations by his office and 19 states against Phusion. Authorities alleged Phusion violated consumer protection and trade practice statutes through promotion of its products to underage persons and other unsavory marketing practices. States participating in the agreement included Arizona, Connecticut, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee and Washington.

"This is an important step toward ending the irresponsible marketing of alcohol to young people," Herrera said.

Although Phusion President Jim Sloan denied that the company violated any laws and disputed the authorities' allegations, he characterized the agreement as "a practical way to move forward and an opportunity to highlight our continued commitment to ensuring that our products are consumed safely and responsibly only by adults 21 and over."

"Phusion Projects will continue to undertake and support productive efforts to make sure our products–and all alcoholic beverages–are used legally, safely and responsibly," Sloan added.

As part of the agreement, Herrera noted, Phusion must monitor its social media pages to eradicate posts that depict irresponsible behavior such as a prior social media post that proclaimed, "My baby boy is a result of my drunken Four binge of wonder." The company also has agreed to refrain from the following marketing practices: depicting Santa Claus in its advertisements, showing a person driving a motor vehicle while consuming alcohol and depicting intoxicated users of Four Loko. 

According to Phusion's website, its "labels and marketing materials clearly state our message: If you’re 21 or older and choose to drink, please drink responsibly. If you’re under 21, respect the law and don’t drink."

Last year, under a deal with the Federal Trade Commission, Phusion agreed to seek government approval to place an Alcohol Facts panel on its containers, revealing the container size, number of servings in it, alcohol by volume and serving size in fluid ounces. The FTC accused Phusion of violating federal law by making false and misleading representations, namely claiming its drink contained the equivalent of one or two beers.

"In truth, downing the fruit-flavored beverage in one sitting is more akin to drinking four or five beers at once," wrote Lesley Fair, a senior attorney with the FTC's Consumer Bureau of Protection.

Jaisen Freeman, one of the co-founders of Phusion Projects, said at the time that he disagreed with the FTC's allegations but deemed the "agreement a practical way to move forward."

In the United States, Four Loko is available in 9 flavors, including fruit punch, watermelon and peach, and the 23.5-ounce cans contain 6%, 8% and 12% alcohol by volume (ABV).