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Four Loko owner settles $400,000 lawsuit, changes marketing campaign

Massachusetts Attorney General Martha Coakley announced Tuesday that Phusion Products, LLC, owner of Four Loko, has agreed to a $400,000 multi-state settlement for violations relating to marketing the beverage to underage consumers. PHOTO BY EMILY ZABOSKI/DAILY FREE PRESS STAFF

Massachusetts Attorney General Martha Coakley announced Tuesday that Phusion Products, LLC, owner of Four Loko, has agreed to a $400,000 multi-state settlement for violations relating to marketing the beverage to underage consumers. PHOTO BY EMILY ZABOSKI/DAILY FREE PRESS STAFF

To prevent companies from promoting irresponsible and underage drinking, Phusion Projects LLC, an alcoholic beverage company that put out Four Loko, is paying $400,000 in settlement fees after Massachusetts Attorney Gen. Martha Coakley filed allegations against them for unlawful advertisements.

Coakley filed the allegations in 2010, accusing Phusion of violating consumer protection and trade statutes that prohibit deception in marketing, according to a Tuesday release.

“Binge drinking and underage drinking are public health concerns, and it is essential that companies market their products responsibly, particularly when they are selling alcoholic products that may appeal to minors,” said Coakley in the release. “We are pleased that the company will improve the marketing and promotion of its flavored malt beverages to prevent dangerous drinking behaviors.”

Jim Sloan, president of Phusion Projects, said his company did not violate any laws and disagrees with the allegations against him. However, the company had many reasons for amicably settling the dispute.

“We consider this agreement 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,” he said.

In addition to paying $400,000, Phusion will be required to make several changes to their marketing campaigns. They are now prohibited from promoting the misuse of alcohol, distributing or promoting alcohol to people underage and promoting and manufacturing the mixing of alcohol with caffeine, particularly in one of their main products: Four Loko.

“The agreement also notes Phusion’s decision several years ago, in 2010, to reformulate Four Loko to remove caffeine, as well as guarana and taurine,” Sloan said. “Phusion continues to believe, however, as do many people throughout the world, that the combination of alcohol and caffeine can be consumed safely and responsibly.”

They are also prohibited from hiring underage persons to be a part of their promotions and from hiring models for promotional materials that are under 25 or appear to be under 21, and they cannot affiliate their brand with any schools or colleges or distribute merchandise with their brand imprinted on it to underage persons.

Sloan said the attorney generals like Coakley have decided to allocate the $400,000 to continued efforts in increased education on the misuse of alcohol and the enforcement of current laws surrounding the use of alcohol.

“As we all know, underage drinking and alcohol abuse are serious problems in need of serious solutions,” he said. “They will not, however, be solved by singling out specific products or alcoholic beverage categories … 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.”

Many residents said preventing inappropriate and deceptive advertising is important, but that Coakley may be taking it to an extreme.

“It’s good to prevent there from being mixed messages to the youth in our society,” said Lidia Maldonado, 51, of the South End. “Stopping companies from promoting binge drinking and underage drinking is good, but they may be going too far when they stop the company from selling stuff with their brand on it to anyone underage.”

Matthew Hames, 30, of Allston, said the results of the settlement are too strict.

“I’m not sure I agree with there being laws like this for how companies can advertise,” he said. “In the free market, companies should be allowed to advertise how they choose unless it becomes offensive to a large group of people … this may be controversial, but it’s not harmful to anyone. And the people consuming it and the people modeling for them are doing so by choice.”

Tesa Hartmann, 45, of Boston, said she was surprised similar allegations are not more frequent.

“It surprises me there haven’t been lawsuits over cigarette companies advertising smoking as cool and fun — it seems like the same issue,” she said. “If they’re going to hold [Phusion] to this standard, they need to be consistent across the board.”

1 Response for “Four Loko owner settles $400,000 lawsuit, changes marketing campaign”

  1. Christine Flemming says:

    This is not related to the advertising, but to the content in the Four Loko drink. I had not been introduced to this beverage before, and on June 5, 2014, I had it for the first time. I did make a poor judgment call by getting behind the wheel and driving, but my actual concern is that for one brief second, I had the idea that it would be a good idea to drive my car into oncoming traffic. I was not suicidal, but the idea popped into my head. I did that, and thankfully the other person and I survived. I then had Four Loko again on June 22, 2014, and I completely freaked out with some rather bizarre behavior. I have never had a problem like this with regular beer, etc, but there is something in this drink that I think should be investigated.

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