The PACT ACT: Is Government-Controlled Packaging Going Too Far?

By: Jennifer Bautista, CLASS Publications Coordinator 2010-2011

In March 2010, President Obama signed S. 1147, The Prevent All Cigarette Trafficking Act (PACT Act), which went into effect on June 29, 2010. The purpose of the act is to prevent tobacco smuggling, ensure the collection of all tobacco taxes, and to prevent underage smoking. The PACT Act gives the Food and Drug Administration the authority to regulate, but not ban, tobacco products.

In a nutshell, the PACT Act does the following:

1. Requires internet and mail-order cigarette vendors to pay all applicable federal, state, local or tribal tobacco taxes and affix any related tax stamps before delivering any cigarettes or smokeless tobacco products to any customer in a state.

2. Prohibits cigarettes that have candy, fruit and spice flavors as their main flavors.

3. Requires tobacco companies to fully disclose ingredients and additives and send information to the FDA about the nicotine content of their products and the health consequences of using them.

4. Bans targeting youth with marketing campaigns that give away clothing and other items with their logos, or distributing free samples of cigarettes.

5. Ends terms such as “light,” “low,” and “mild” for products.

6. Requires new, colored and graphic warning labels designed and approved by the F.D.A. to occupy 50 percent of the space on each package of cigarettes.

The Food and Drug Administration recently released proposed warning labels to be affixed on the top half of cigarette boxes. The PACT Act requires the warnings to be located at the top of the boxes because many tobacco retailers only display the tops of cigarette packs. By October 22, 2012, manufacturers will not be allowed to distribute cigarettes in the United States without the graphic warnings. These warnings must also cover a fifth of any cigarette advertisements. The government and public health officials hope that the new labels will spur an anti-smoking sentiment in the United States. Tobacco is the leading cause of premature and preventable death in the country, with over 440,000 deaths each year.

The idea for graphic warnings on cigarette boxes is nothing new. Thirty-nine other countries also require large, graphic depictions of health problems associated with long-term smoking. Studies have shown that pictorial warnings make a greater impression than warnings that are purely textual. Canada, the first country to introduce graphic warnings on cigarette boxes, has seen a decline in smokers since introducing the new packaging.

However, these graphic warnings may not make it to October 2012. Several cigarette companies plan to contest the legality of the labels in federal court based on property and free-speech rights. Additionally, a federal judge in Kentucky has already ruled that the Food and Drug Administration could require graphic warning labels but they could not restrict a cigarette company’s use of colors in their packaging, as it would infringe upon free speech. This ruling is currently being appealed.

Is Advertising Protected Speech? POM Wonderful v. FTC

By Joseph A. Nicholson, CLASS Member, 2010-11

The Federal Trade Commission plays an important role in protecting consumers by investigating and prosecuting individuals and companies that use deceptive practices. But is the FTC going too far in requiring FDA approval of certain health-related claims associated with products even if the claims are supported by reputable scientific consensus and are therefore not “deceptive?” 

POM Wonderful, the maker of a pomegranate juice beverage, certainly thinks so. In September, the company filed suit against the FTC in federal district court seeking to curb the agency’s new policy. Specifically, the FTC now requires claims that represent a product treats, mitigates, or prevents disease receive prior FDA approval regardless of whether or not the claims are true or supported by competent, reliable scientific evidence.

Obtaining FDA approval is a lengthy and costly process that would prevent many product makers from speaking freely about legitimate benefits of their products. Doing so violates their First Amendment rights, says POM, and is beyond the FTC’s authority. POM’s suit comes in response to a complaint filed by the FTC in the Northern District of California seeking to enjoin POM from toting the health benefits of pomegranates in marketing their products.

The litigation between POM Wonderful and the FTC has the potential to reshape the regulation of health claims in consumer products, and has been called “the biggest fight since Ali vs. Frasier.” Underscoring the legal challenge are conflicting consumer interests. The consumer benefits from the restriction of unsound claims, but also relies on advertising to provide information about potentially beneficial products. Waiting for formal approval of claims from the FDA can keep true claims out of the market for too long, and it makes the agency the final arbiter of health decisions many consumers prefer to make themselves. Makers of food, beverages and dietary supplements, and the consumers of these products, will certain want to stay tuned for developments in this case.

Consumer Law Assistance for Businesses

Most businesses wish to do their best to satisfy their consumers. Part of this process is complying with consumer protection laws.

In order to ensure that companies are in compliance with consumer protection laws, the Federal Trade Commission offers an online guide. This guide contains helpful information regarding many regulations including regulations on spam, credit reports, advertising and more. This can also be a valuable resource for consumers who wish to learn more about the regulations the companies they solicit are required to follow.

Check out this link to view the Federal Trade Commission's Bureau of Consumer Protection, Business Center: http://business.ftc.gov/

Selling Apocalypse Now

Author: Kelly Kraetsch, CLASS Outreach Officer, 2010-11

While the global economy is still suffering from the effects of the worst recession since the Great Depression, companies are cashing in on people's concern about the future. Conservative talk show hosts like Glenn Beck work to elevate the climate of financial instability and political polarity to a state of fear of imminent socioeconomic Armageddon. Now, he and others who fuel that fear for a living are profiting from endorsing prophetic products.

The most well-known calamity-centered retailer is Goldline, an online gold seller that advertises heavily during conservative programming, touting the message that Americans should invest in gold now to avoid impending devaluation of U.S. currency. In the ad that plays during Glenn Beck's show, often immediately after his rantings about the likelihood of economic paralysis, Beck opens with, "Trust the people at Goldline." The company has also garnered endorsements from other conservative pundits like Laura Ingraham, Fred Thompson, and Mark Levin, who pitch the company on their own shows and endorse company on its website.

Goldline is under investigation by the Santa Monica City Attorney and was the subject of a September 23 Congressional Hearing after the City Attorney's office received more than one hundred complaints from customers about aggressive sales tactics and allegations that gold was sold to them under false pretenses. Under specific scrutiny is Goldline's new campaign calling on customers to buy "numismatic" coins instead of traditional bullion. These coins contain only 10% of the gold relative to bullion, but have a 25% higher markup. A Consumer Reports investigation determined that Goldline's prices on collectible coins was "inflated." But more egregious is how the company is hawking these overpriced coins: by explicitly analogizing the current economy to the Depression. Goldline's website and mailed sales materials include a copy of F.D.R.'s 1933 executive order warning that private gold ownership would become illegal with the exception of rare numismatic coins. A headline on its website reads: "Goldline Report: Seizure of Gold in '33 Increases Likelihood of 21st Century Governmental Gold Bullion Heist." http://www.goldline.com/government-gold-seizure.

Drawing any parallel for gold confiscation now is patently fraudulent. The U.S. departed from the gold standard in the 1970s. Gold hoarding is a non-issue and the government would have no motivation to confiscate private gold in any form.

Another of Beck's sponsors retails a product it claims will be even more apocalypse-resistant than gold. Survival Seed Bank sells a kit that enables customers to grow their own acre-sized "crisis garden."

In its commercial, a TV plays scenes of Depression-era breadlines and soup kitchens. The spokesman asks: "Are you ever worried that the politicians and the bankers are going to bring the whole thing crashing down? If so, pay close attention, because in an economic meltdown, non-hybrid seeds could become more valuable than even silver and gold. After all, securing a source of food for your family is the single most important thing you can do." At the end of the commercial, viewers are reminded to "prepare today" because "in an economic crisis, non-hybrid seeds are the ultimate barter item." http://www.youtube.com/watch?v=DqRqwU5oeLA

On its website, Survival Seed Bank warns that government agencies are stockpiling canned food and that the supply in threatened by

"a desperate lower class demanding handouts . . . a rapidly diminishing middle class crippled by police state bureaucracy . . . an aloof, ruling elite that has introduced us to an emerging totalitarianism which seeks control over every aspect of our lives." The company admonishes that "as the meltdown progresses, one of the first things to be affected will be our nation's food supply. Expect soaring prices along with moderate to severe shortages by spring. If you don't have the ability to grow your own food next year, your life may be in danger."

The newest Beck advertiser in the "end of the world" market is Food Insurance, which sells backpacks of freeze-dried food packets to feed its customers for two weeks to a year after the food supply is compromised by chaos.

Beck's face and the statement, "as recommended on the Glenn Beck Program" are prominently displayed on the top of the company's website, with a link to the commercial running during his show, in which Beck tells his audience: "I want to talk to you about the changing world that we live in. We have health insurance, this is real food insurance . . . I finished my food storage, and I couldn’t believe how relieved I was, I remember sitting down on the stairs of the basement and looking at it, and thinking ‘I could lose my job, and my family will eat. Sometimes guys don’t realize how much pressure is on them.'" At the end of the ad, Beck urges his audience to "do the easy stuff now. Prepare yourself for what we all hope won’t happen, but probably will, if you’re not prepared. Thanks."
http://www.foodinsurance.com/index.php?gclid=CP6Wm8qY-aQCFQUmbAodvUWmiw
While to most, the concept of peddling products for the apocalypse may seem ridiculous or even comical, the effects are not innocuous. The fear-peddling industry is using people's real economic misfortune and the correlated "every man for himself" philosophy to take advantage of unsophisticated and vulnerable consumers. The self-interested fear mongering of Beck and other media figures who endorse these companies has not just blurred the line between programming and advertising, but rendered it invisible. These pundits should not be able to profit from their propaganda.