Analysis of Proposed Consent Order
to Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to final approval, to a proposed consent order from respondent Physicians Formula Cosmetics, Inc.

The proposed consent order has been placed on the public record for sixty (60) days for reception of comments by interested persons. Comments received during this period will become part of the public record. After sixty (60) days, the Commission will again review the agreement and the comments received and will decide whether it should withdraw from the agreement and take other appropriate action or make final the agreement's proposed order.

This matter concerns "Made in USA" labeling of cosmetics, cosmetic brushes, and skin care products. The Commission's complaint charges that respondent, by labeling its products as "Made in USA," misrepresented that they were all or virtually all made in the United States when, in truth and in fact, a significant proportion of their components was of foreign origin.

The proposed consent order contains a provision designed to remedy the charges and to prevent the respondent from engaging in similar acts and practices in the future. Part I of the proposed order prohibits the respondent from misrepresenting the extent to which its products are made in the United States. The proposed order would allow respondent to represent that its products are made in the United States as long as all, or virtually all, of the components of the products are of U.S. origin and all, or virtually all, of the labor in manufacturing them is performed in the United States.

The proposed consent order additionally provides that the order shall not prohibit the respondent from depleting its inventory of products bearing a marking or labeling otherwise prohibited by the order and existing on the date the order is signed, in the normal course of business, provided that no such existing inventory may be shipped later than 120 days after the date the order becomes final.

Part II of the proposed order requires the respondent to maintain materials relied upon in disseminating any representation covered by the order. Part III of the proposed order requires the respondent to distribute copies of the order to certain company officials and employees. Part IV of the proposed order requires the respondent to notify the Commission of any change in the corporation that may affect compliance obligations under the order. Part V of the proposed order requires the respondent to file one or more compliance reports. Part VI of the proposed order is a provision whereby the order, absent certain circumstances, terminates twenty years from the date of issuance.

The purpose of this analysis is to facilitate public comment on the proposed consent order. It is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.