FTC Beat
Posts Tagged ‘E-cigarettes’
Mar 06
2014

Electronic Cigarette Advertising Practices Draw Legislative Attention – Will Regulations Follow?

Advertisements for electronic cigarettes, or “e-cigarettes,” are increasingly drawing scrutiny from consumer advocates and public health groups who are calling for the federal government to regulate these advertisements in the same manner that traditional cigarette advertisements are regulated.

The e-cigarette industry is growing at a rapid pace, particularly among younger people. Last year, the industry generated roughly $2 billion and industry sources estimate sales are on pace to hit $5 billion this year.

Currently, there are no regulations governing advertisements of e-cigarettes. In contrast, advertisements of traditional cigarettes are heavily regulated. For instance, various federal laws and regulations prohibit cigarette manufacturers from sponsoring sporting events, and advertising cigarettes on television is also barred. Under the terms of a settlement from a lawsuit in 1998, tobacco companies agreed to not use cartoon characters to market cigarettes.

For roughly 10 years, the marketing team at R. J. Reynolds used the cartoon character “Joe Camel” to promote cigarettes. After years of pushback and under pressure from a pending lawsuit, Congress and various consumer groups, R.J. Reynolds announced that it would settle the pending lawsuit out of court and voluntarily end its use of Joe Camel.

BlueCigs, a leading manufacturer of e-cigarettes, uses a cartoon character named Mr. Cool in a television advertising campaign. Industry watchdogs have criticized the television ads, particularly given the growth of the industry and the regulations faced by traditional tobacco manufacturers. Some in the industry have noted the similarity between Mr. Cool and Joe Camel and worry that these advertisements will have the same effect of luring young people to try e-cigarettes that many believe Joe Camel had with traditional cigarettes.

Last month, a group of Senate Democrats introduced legislation to prohibit e-cigarette producers from marketing their products to children. This bill marked the first legislative attempt to regulate the e-cig industry. The bill would ban marketing e-cigarettes to children based on standards promulgated by the Federal Trade Commission (FTC), and would empower the FTC and state attorneys general to enforce the advertising ban.

Additionally, the White House Office of Management and Budget has been reviewing a rule proposed by the U.S. Food and Drug Administration that would bring e-cigarettes under its jurisdiction. The regulations have been under review since October. We have previously written about FDA plans to regulate the e-cigarette industry here.

The e-cigarette industry should be aware that their marketing and advertisements are being closely monitored. Regulation and potential lawsuits could be on the horizon and companies should review their policies and practices to make sure they are prepared. The use of cartoon characters may be one advertising method to forego at this point, instead focusing on mature individuals using the product.

Oct 24
2013

FDA Regulations on the Horizon for Billion Dollar E-Cigarette Industry

In September, 40 state attorneys general wrote to the U.S. Food and Drug Administration (FDA) asking the agency to take all available measures to issue regulations on the advertising, ingredients, and sale to minors of electronic cigarettes, also known as e-cigarettes or e-cigs. The full text of the letter is available here. The FDA has set a deadline of October 31 to issue proposals to regulate e-cigarettes, but the agency has delayed action in the past.

E-cigarettes are battery-operated nicotine delivery devices that are meant to replicate the flavor and sensation of smoking a tobacco cigarette. The sales of these products are rapidly growing and have doubled every year since 2008. In 2013, the industry is projected to reach $1.7 billion in sales. Tobacco giants Altria, which owns Philip Morris, and R.J. Reynolds, both of which have not previously been involved in the e-cigarette industry, are now launching their own brands.

E-cigarettes have been available for several years, but there has been very little regulation of the industry since its inception. However, the calls for the FDA to explore regulation are becoming louder, and momentum is growing to have the FDA take action. Last month, Rep. Henry Waxman (D-Calif.) and three other House Democrats sent a letter to FDA Commissioner Dr. Margaret Hamburg urging the agency to take action on regulating e-cigarettes. Those same representatives also sent a letter to the Chairman of the House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations, and the Subcommittee on Health urging the subcommittees to hold a hearing on the increased use and health impact of e-cigarettes.

In the past, the FDA has stated that it would not feel compelled to regulate e-cigarette companies unless they overtly advertised their products as smoking cessation devices. We have previously looked at Federal Trade Commission regulation of e-cigarette advertising claims. The FTC has jurisdiction to regulate advertisements for any product, but has yet to flex enforcement muscle with regard to e-cigarettes. There are currently no federal rules about advertising e-cigs to young people, but the attorney general letter asked the FDA to “ensure that companies do not continue to sell or advertise to our nation’s youth.”

There has been very little regulation of the industry since its inception– partially because the extent of the FDA’s authority to regulate e-cigarettes is not clearly defined. In 2010, the U.S. Court of Appeals for the D.C. Circuit issued an opinion in Sottera, Inc. v. Food & Drug Administration, affirming the district court’s decision that the FDA could not regulate e-cigarettes as a medical device under the Food, Drug & Cosmetic Act and finding that the FDA’s authority is limited to traditional tobacco products. The FDA also has authority to regulate e-cigarettes under the Tobacco Control Act of 2008, but that authority is limited. Specifically, the Tobacco Control Act authorizes the FDA to regulate “tobacco products,” giving the agency authority to impose restrictions on their sale, advertising and promotions, and establish other standards for their distribution and production.

It remains to be seen what actions will be taken by the FDA in response, but it does seem as if some type of regulation may be on the horizon. The industry will need to adapt to these changes and be active in the rule making and comment process to make sure that the regulations proposed are fair. We will continue to monitor developments on e-cigarette regulations here.

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About Ifrah Law

FTC Beat is authored by the Ifrah Law Firm, a Washington DC-based law firm specializing in the defense of government investigations and litigation. Our client base spans many regulated industries, particularly e-business, e-commerce, government contracts, gaming and healthcare.

Ifrah Law focuses on federal criminal defense, government contract defense and procurement, health care, and financial services litigation and fraud defense. Further, the firm's E-Commerce attorneys and internet marketing attorneys are leaders in internet advertising, data privacy, online fraud and abuse law, iGaming law.

The commentary and cases included in this blog are contributed by founding partner Jeff Ifrah, partners Michelle Cohen and George Calhoun, counsels Jeff Hamlin and Drew Barnholtz, and associates Rachel Hirsch, Nicole Kardell, Steven Eichorn, David Yellin, and Jessica Feil. These posts are edited by Jeff Ifrah. We look forward to hearing your thoughts and comments!

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