The Federal Trade Commission said Tuesday that Chicago-based Phusion Projects will be required to put an "alcohol facts panel" on the back of flavored malt beverage cans containing more than two servings of alcohol. The panel, similar to "nutritional facts" labels found on foods, would disclose the alcohol by volume and the number of servings in the container.
Phusion also will have to redesign cans of drinks containing more than 2.5 servings of alcohol so they can be resealed and the drink wouldn't have to be consumed in one sitting.
The FTC had accused Phusion of implying in ads that its supersized 23.5-ounce can of Four Loko was equal to one or two regular 12-ounce beers. In fact, the agency says, the can - which contains up to 12 percent alcohol - is really more like four to five beers.
Company co-founder Jaisen Freeman said Phusion did not agree with the allegations, but considered the agreement a way to move forward.
"We share a common interest with the FTC in providing consumers with information and packaging options to help them make informed, responsible decisions," Freeman said.
The commission had initially proposed a deal with Phusion requiring new label disclosures on products with more than 2.5 servings of alcohol. But the agency was flooded with complaints about the dangers of the supersized drinks, especially with underage drinkers - so it lowered the disclosure trigger to more than two servings of alcohol.
The FTC also was going to require a label on the front of the can with an alcohol comparison to a regular beer, but some public commenters worried that might lead to binge drinking - by suggesting Four Loko was a quick, cheap way to get drunk.
Four Loko gained national attention in 2010 after the hospitalization of college students in New Jersey and Washington state. Twelve Central Washington University students were hospitalized after overdosing on the drink at a party in Roslyn. Some states, including Washington, banned the drink, worried about the caffeine in Four Loko and its potential to mask how much alcohol one could safely consume. Amid a crackdown by the Food and Drug Administration, the drink's makers removed the caffeine and started selling Four Loko without the energy kick but still with plenty of alcohol.
In a number of public comments, the commission was urged to ban the drink altogether. But the FTC says it has no jurisdiction to force the product off the market.