Critical Legal Issues for the Cosmetics Industry: Interstate Commerce, Adulterated, and Misbranded

The strength of the beauty industry is overwhelming. The US cosmetic industry market was worth $93.5 billion in 2019. Nearly half of millennials favor purchasing skin products that have CBD oil. 80% of US women follow beauty industry trends. 80% of US women use fragrance products. The cosmetics industries employ nearly one million people. Nearly 90% of consumers indicate a preference for companies that are socially responsible. 82% of women believe that social media drives trends.

Skincare accounts for nearly 60% of beauty industry profit – with anti-aging and beauty products being the prime sellers. Advocates claim that CBD oil is effective at treating acne. Nearly 40% of adults are interested in cosmetic products that are gender neutral – both women and men can use. Many men are now seeking better skincare and beauty products such as facial cosmetics.

Other publications confirm these numbers. Business Insider stated the beauty industry is worth $532 billion worldwide. Some of the new trends in beauty care include:

• Retailers are now experimenting with beauty care products.
• Many different price points are being targeted to different demographics
• Transparency – the listing of the materials and sources – is increasing
• As consumers are looking at products that are toxin-free, the consumers are looking at the “clean beauty movement.”  Paired with federal protocols like the Personal Care Product Safety Act — a bipartisan bill that if passed will give FDA further oversight to regulate cosmetics and personal-care products — the focus in shifting to brands that have features like recycled packaging.

Cosmetics generally include:

• Skin care products
• Hair care products
• Color Cosmetics
• Fragrances
• Personal Care products
• OTC products

FDA Compliance Issues

The profitability and broad scope of the cosmetic industry make cosmetics a primary target for manufacturers and retailers. Numerous health providers and skin care professionals are providing advice and recommendations to consumers. Any company involved in the cosmetic industry needs to understand that there are government checks on these products and services. There are regulations that govern these products to ensure the products are safe for use. There are rules that govern the promotion of cosmetic products to ensure that consumers are making honest choices – that the consumer is not being misled or promised benefits that are not true or likely.

The primary law that regulates the cosmetic industry is the Federal Food, Drug, and Cosmetic Act (FD&C Act). This law is administered by the Food and Drug Administration.

A key provision of the FD&C Act is the right to regulate any cosmetic, food, device, or drug that is introduced or delivered into interstate commerce – if that item is “adulterated or misbranded.” The FD&C Act prohibits the receipt of these products (if the products are adulterated or misbranded) and the delivery or offer of delivery of any of these cosmetics or other products – “for pay or otherwise.”

The Act also prohibits:

“The alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded”

The Act applies to manufacturers, distributors, retailers, and packers. These entities are required to ensure that the businesses are not dealing in cosmetics or other products that are misbranded or adulterated – even if the misbranding or adulteration was caused by someone else. Essentially, once you place the product into interstate commerce or accept the product – your company bears the burden for any noncompliance with the FD&C Act. The laws apply to the product, its components, and the packaging.

The FD&C Act defines these key terms – interstate commerce, adulteration, and misbranding. FDA has the authority to enforce the FD&C Act. In addition, violations of the Fair Packaging and Labeling Act can result in misbranding.

How the FDA&C defines interstate commerce

Interstate commerce, according to Section 201(b) of the FD&C Act [21 U.S.C. 321(b)] includes:

• Commerce between any State or Territory and any place outside thereof, and
• Commerce within the District of Columbia or within any other Territory not organized with a legislative body

The concept of interstate commerce applies to the making of cosmetics, the packaging of cosmetics, and the distribution of any cosmetic product. In most cases, if a skincare, healthcare, facial-care, or any cosmetic is purchased or used – the likelihood is that interstate commerce is involved. While a product such as a skincare lotion may be made in California, there is a likelihood that one or more of the ingredients came from another state or another country. While some unique situations apply, manufacturers and others in the supply chain should generally assume the interstate commerce element of the FD&C Act applies. In addition, even if a product is developed within one state, if the product is marketed across state lines, then the product may qualify for FDA oversight due to its marketing to other states.

When are cosmetics considered “adulterated?”

The adulteration provisions of the FD&C Act are found in Section 601. A cosmetic is considered “adulterated” if:

• The cosmetic
  • “bears or contains any poisonous or deleterious substance which may render [the cosmetic] injurious to users under the conditions of use prescribed in the labeling thereof, or, under such conditions of use that are customary or usual,

Except that this provision shall not apply to coal-tar hair dye, the label of which bears the following legend conspicuously displayed thereon:”

“Caution-This product contains ingredients which may cause skin irritation on certain individuals and a preliminary test according to accompanying directions should first be made. This product must not be used for dyeing the eyelashes or eyebrows; to do so may cause blindness.”

and the labeling of which bears adequate directions for such preliminary testing.

Generally, hair dye does not include eyelash dyes or eyebrow dyes.

• There is any decomposed, putrid, or filthy substance, in whole or in part, in the cosmetic.
• The cosmetic was
  • “prepared, packed, or held under insanitary conditions whereby [the cosmetic] may have become contaminated with filth, or whereby [the cosmetic] may have been rendered injurious to health.”
• If the container for the cosmetic is composed of any poisonous or deleterious substance, wholly or partially, which may make the cosmetic injurious to the user’s health
• “If [the cosmetic] is not a hair dye and [the cosmetic] is, or [the cosmetic] bears or contains, a color additive which is unsafe within the meaning of section 721(a).” (Section 721(a) of the FD&C Act defines when color additives are unsafe.)

The FD&C Act addresses:

• How the product is composed
• The circumstances involved with the cosmetic’s manufacture, shipment, and storage
• The container for the cosmetic
• An exception for coal-tar hair dyes.

What does the “misbranding” of a cosmetic mean?

Section 602 of the FD&C Act defines cosmetic “misbranding” as follows:

• If the labeling is not true or misleads in any respect
• If the package form of the product fails to bear a label which contains:
  • The manufacturer’s, packer’s, or distributor’s name and place of business
  • A true statement of the quantity of the contents – by weight measure, or number
  • Reasonable variations of the quantity statement may be permitted.

FDA can establish whether any exemptions apply for small packages

• The statements, words, and other information that are required to be placed on the label must be prominently displayed “with such conspicuousness (as compared with other words, statements, designs, or devices in the labeling) and in such terms as to render [the label] likely to be read and understood by the ordinary individual under customary conditions of purchase and use.”
• The containers should not be formed, made, or filled – if [the containers] misleads
• If the product is a color additive:
  • “unless the packaging and labeling are in conformity with such packaging and labeling requirements, applicable to such color additive, as may be contained in regulations issued under section 721.” This provision does not apply to packages with color additives, for cosmetic products, if the products are “marketed and intended for use only in or on hair dyes (as defined in the FD&C Act).
• If the packaging or labeling violates the Poison Prevention Packaging Act

The FD&C Act definition of misbranding applies to:

• False or misleading information – which includes what is revealed and what information is left out
• “Lack of required information”
• “Conspicuousness and readability of required information”
• “Misleading packaging”
• “Improper packaging and labeling of color additives”
• “Deficiencies where the Poison Prevention Packaging Act requires special packaging.”

The FD&C Act also provides that – for purposes of determining whether the labeling or advertising is misleading (and thus misbranded), then the following items should factor into the analysis:

“not only representations made or suggested by statement, word, design, device, or any combination thereof, but also the extent to which the labeling or advertising fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the article to which the labeling or advertising relates under the conditions of use prescribed in the labeling or advertising thereof or under such conditions of use as are customary or usual”

Misbranding also can arise when a cosmetic should be labeled a drug. FDA has very strict requirements for approving drug products.

The FPLA

Cosmetics that are marketed that violate the FPLA or any applicable regulations are deemed misbranded within the FDA&C Act definition. The FPLA provides that cosmetics which are offered for sale as a consumer commodity require:

• Additional label information such as the identity of the product and
• The cosmetics may require a declaration of the ingredients, may need additional label information, and may need to meet deceptive packaging regulations.

The FPLA defines a consumer commodity, for FDA-regulated products, as:

“any food, drug, device, or cosmetic (as those terms are defined by the Federal Food, Drug, and Cosmetic Act …, and any other article, product, or commodity of any kind or class which is customarily produced or distributed for sale through retail sales agencies or instrumentalities for consumption by individuals, or use by individuals for purposes of personal care or in the performance of services ordinarily rendered within the household, and which usually is consumed or expended in the course of such consumption or use.” [15 U.S.C.1459(a)]

Cosmetics are regulated by the Food and Drug Administration to ensure the cosmetics are safe for consumes and to ensure that that the products are cosmetics and not drugs or therapeutic treatments. Experienced healthcare lawyers explain which regulations apply including labeling and other requirements. Since many cosmetics are applied to the skin and hair, it is critical that consumers feel safe when people use these products. Often, cosmetics that may violate FDA rules and the FPLA can come into compliance if proper precautions such as correcting improper labels are taken.

Contact Cohen Healthcare Law Group, PC for legal counsel on healthcare transactions, regulatory compliance, and FDA and FTC law. Our experienced healthcare & FDA attorneys advise healthcare companies and healthcare providers ranging from medical centers, to integrative and functional medicine practices, cosmetics and supplement companies, and medical device manufacturers.