Receiving an email or letter from the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) can be unsettling—particularly when it comes from TTB’s Market Compliance Office.
A Market Compliance notice generally means that TTB has identified a potential compliance issue involving an alcohol beverage product, advertisement, labeling, trade practice, or other activity in the marketplace. It does not necessarily mean that TTB has already made a final determination that your company violated the law. However, it should be taken seriously and addressed promptly.
What Is TTB’s Market Compliance Office?
TTB’s Market Compliance Office (“MCO”) is responsible for monitoring the alcohol beverage marketplace for compliance with federal requirements. Among other things, MCO reviews alcohol beverage advertising, responds to complaints, monitors products in the marketplace, and assists with investigations involving labeling, advertising, trade practices, and product safety.
Unlike the COLA process, which generally involves reviewing a label before a product enters the marketplace, Market Compliance is part of TTB’s post-market oversight. TTB may identify potential issues through its own monitoring activities, consumer complaints, referrals, industry complaints, or investigations.
For example, TTB may review:
- An alcohol beverage company’s website or social media accounts;
- Print, digital, television, radio, or other advertisements;
- Product labels or packaging being sold in the marketplace;
- Claims about a product’s characteristics, ingredients, health effects, or production methods;
- Whether advertising contains required information;
- Whether advertising or labeling is consistent with an approved COLA;
- Potentially misleading statements or representations; or
- Certain trade practices between industry members.
TTB specifically notes that its advertising reviews may result from complaints or referrals, but it may also independently select advertisements for review.
Why Did I Receive a Market Compliance Notice?
There is no single type of Market Compliance notice. The nature of the communication will depend on what TTB has identified and what it wants the industry member to address.
Some matters may be relatively straightforward. For example, TTB may identify an advertisement that is missing required information or contains language that TTB believes could be misleading. TTB has identified issues such as missing mandatory statements, misleading health-related claims, representations that create a misleading impression about a product, and advertisements that depict labels that do not correspond to the approved label.
Other matters may be more significant. TTB’s Market Compliance Office may become involved in issues concerning mislabeled or adulterated products, including situations in which a product may need to be removed from the marketplace.
The first step, therefore, is to understand exactly what TTB is asking about.
A Market Compliance Notice Is Not the Same as a COLA Rejection
One important distinction is that a Market Compliance matter generally arises after TTB has identified an issue with something already in the marketplace or otherwise subject to review.
An approved COLA does not necessarily mean that every representation made in connection with the product is compliant. TTB’s Market Compliance Office may review the product’s advertising and other marketplace representations separately.
For example, TTB may determine that an advertisement contains a problematic claim even though the product’s underlying label has an approved COLA. TTB’s advertising guidance makes clear that advertisements are subject to their own requirements and that TTB reviews advertising for issues such as misleading statements, mandatory information, health-related claims, and representations inconsistent with approved labels.
In other words, a COLA is not necessarily a shield against subsequent marketplace compliance questions, especially if the claims are not found on the original TTB label approval (i.e., if the claims appear on social media, print ads, or similar that typically do not require a pre-market TTB review or approval).
What Should You Do If You Receive a Notice?
1. Do Not Ignore It
Even if the issue identified by TTB seems minor—or you disagree with TTB’s characterization—it is generally important to respond appropriately and within any timeframe provided.
A Market Compliance communication may request information, ask that an advertisement or representation be corrected, or request that an industry member take other action. In more serious matters, TTB may request corrective action involving products already in the marketplace.
2. Read the Notice Carefully
Start by identifying:
- The specific product, label, advertisement, or activity at issue;
- The particular language, image, claim, or conduct TTB has identified;
- Whether TTB is requesting information or corrective action;
- Whether TTB has provided a deadline for responding;
- Whether TTB is asking for supporting documentation; and
- Whether TTB expects the company to stop using, revise, or remove something from the marketplace.
The distinction between “please provide information” and “please take corrective action” can be significant.
3. Preserve the Relevant Materials
Before making changes, gather and preserve the materials relevant to the issue.
Depending on the circumstances, this may include:
- The current and prior versions of the label;
- The applicable COLA;
- Formula approvals or other TTB correspondence;
- Product specifications;
- Website pages;
- Social media posts;
- Advertising files;
- Photographs of the product as sold;
- Marketing materials;
- Communications with distributors, retailers, agencies, or other third parties; and
- Documentation supporting particular claims or representations.
This can help establish exactly what was being used in the marketplace and why.
4. Determine Whether the Issue Is Limited to One Item
One of the most important questions is whether the issue identified by TTB exists only in the particular material referenced in the notice or appears elsewhere.
For example, if TTB identifies a potentially problematic claim on a company’s Instagram account, it may be appropriate to review the company’s website, other social media platforms, retailer materials, email marketing, and other advertising to determine whether the same claim appears elsewhere.
Similarly, if TTB identifies an issue with one label, the company may want to determine whether other products use the same language, design element, or labeling approach.
5. Do Not Make an Immediate Response Without Understanding the Issue
A quick response is not necessarily a good response.
Before responding to TTB, the company should understand the factual circumstances, identify the applicable regulatory requirements, and determine what position it intends to take.
In some cases, the appropriate response may be to explain why the company believes the material is compliant. In others, the company may determine that a correction is appropriate. There may also be situations in which additional information or documentation is necessary before the issue can be evaluated.
What Types of Issues Can TTB Identify?
Market Compliance matters can arise in a variety of contexts.
Advertising
Advertising is an area where TTB conducts significant marketplace review. TTB may examine websites, social media, print advertising, broadcast advertising, and other promotional materials.
Potential issues can include missing mandatory information, misleading claims, health-related statements, representations about a product’s identity or characteristics, and advertisements that do not accurately depict an approved label.
TTB also has specifically addressed the use of terms such as “clean” in alcohol beverage labeling and advertising. Depending on the context, TTB may consider a term acceptable descriptive language or may determine that the overall presentation creates a misleading health-related impression.
Labeling and Product Presentation
TTB may identify potential issues with labels or other representations of products in the marketplace.
This can include situations in which the product being sold does not correspond to its approved labeling or where a representation on the product or in advertising creates a misleading impression. For example, MCO could determine that an industry member is using language on a label that was not approved during the COLA process and it is not one of the otherwise allowable revisions to approved labels.
Product Safety and Mislabeling
Market Compliance also has a role in responding to product safety concerns and certain significant mislabeling issues.
In appropriate circumstances, TTB may request a voluntary recall of an alcohol beverage. TTB explains that such recalls can involve products that are mislabeled, adulterated, or otherwise found to violate applicable TTB or FDA requirements.
These matters can be considerably more serious than a routine advertising correction and may require coordinated action involving distributors, wholesalers, retailers, importers, or other parties in the distribution chain.
Trade Practices
TTB’s Market Compliance Office also works with the Trade Investigations Division on matters involving potentially unlawful trade practices between industry members.
These matters can involve different considerations from a labeling or advertising issue and may require a broader review of the underlying business relationships and transactions.
Does TTB Always Require a Product to Be Removed?
No. The appropriate response depends on the nature and severity of the issue.
For example, an advertising matter may be addressed by correcting or discontinuing a particular advertisement. A labeling issue may require changes to future production or, depending on the circumstances, corrective action involving products already distributed.
More serious matters can involve product removal or a voluntary recall. TTB explains that its requests for voluntary recalls are generally directed toward situations involving health hazards or significant mislabeling.
The appropriate course of action therefore depends heavily on the specific facts and the language of TTB’s communication.
What About Products That Already Have an Approved COLA?
This is one of the most common sources of confusion.
An approved COLA is important, but it does not mean that every aspect of a company’s marketing or marketplace conduct has been approved by TTB.
TTB’s advertising program operates separately from the COLA process. TTB actually offers pre-market review of industry member advertising and recommends providing the applicable COLA number when requesting review.
For that reason, companies should consider compliance not simply as a one-time label approval exercise, but as an ongoing process that includes the way products are advertised, represented, and sold.
When Should You Consult Counsel?
A company may want to consult alcohol beverage regulatory counsel when a Market Compliance notice:
- Requests a written response;
- Identifies a potentially significant labeling or advertising violation;
- Involves a product already distributed throughout the marketplace;
- Raises questions about product formulation or adulteration;
- Requests a recall or other corrective action;
- Involves potentially unlawful trade practices;
- Could affect a company’s federal permit or regulatory status; or
- Involves facts or legal issues that are unclear.
Counsel can help evaluate the notice, identify the relevant regulatory requirements, assess the company’s factual position, and develop an appropriate response or corrective-action strategy.
Don’t Panic, But Don’t Ignore It
Receiving a Market Compliance notice from TTB does not necessarily mean that an enforcement action has already been taken against your company. TTB’s Market Compliance Office performs a broad range of marketplace oversight activities, and its communications can range from requests for information or corrections to more significant matters involving product removal or recalls.
The most important thing is to understand what TTB has identified, determine what the agency is asking your company to do, and respond thoughtfully and promptly.
For alcohol beverage companies, compliance does not end when a permit is issued or a COLA is approved. Once a product enters the marketplace, its labels, advertising, representations, and other activities may continue to receive regulatory scrutiny. Being prepared to respond to a Market Compliance inquiry can help a company address potential issues before they become more significant problems.
How Lindsey Zahn P.C. Can Help
Receiving a TTB Market Compliance notice can raise important questions about what the agency has identified, what the company is expected to do, and whether the issue extends beyond the specific product or advertisement referenced in the notice. Lindsey Zahn P.C. assists alcohol beverage industry members in evaluating TTB compliance matters, including reviewing Market Compliance notices, assessing the underlying labeling, advertising, or other regulatory issues, and identifying potential areas of concern.
When appropriate, we can also assist with preparing responses to TTB and developing a strategy for addressing the agency’s concerns. Our goal is to help clients understand the issue, evaluate their options, and respond to TTB in a thoughtful and well-supported manner while considering the potential implications for products, marketing materials, inventory, and ongoing business operations.
Contact us today to schedule a consultation and learn how we can assist your company with a TTB Market Compliance notice.
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Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. Because every situation is unique, you should consult qualified legal counsel regarding your specific circumstances.