Follow Regulations and Make the Cosmetic Market in the USA

"Millennials, as it stands, love spending money on makeup." -- Business Insider

There appear to be two constants in the U.S. cosmetics industry: it is one of the most resistant to economic downturns, and creating brand loyalty is a cosmetic manufacturer's best avenue to higher profits.

To the first point, it is true that Americans will scale down their spending habits during tougher economic times, but cosmetics are not at the top of anyone's list of daily sacrifices. In fact, when consumers indulge less in items such as designer clothing, cosmetic sales benefit, as consumers see these less expensive treats as a rewarding trade-off for resisting extravagant shopping sprees.

This also remains true for the younger generations of American shoppers: cosmetics, along with cellphones and Uber rides, are at the top of their spending list.

To the second point, according to a study on the value of customer retention by the Harvard Business School, capturing new customers is expensive. However, "increasing customer retention rates by 5% increases profits by 25% to 95%".

Understanding and complying with all cosmetics regulations in the USA is your opportunity to succeed in one of the strongest markets in the world. Cosmetics are regulated by the FDA under the Food, Drug, and Cosmetic Act (FD&C Act), and the majority of responsibility for compliance and testing is placed on the manufacturers, marketers and importers. At face value, it appears that very little action is "required" by companies to introduce a new cosmetic to the U.S. market, which makes it easier for new startups to proliferate the shelves and increase competition.

That being said, regulations do exist in America, and any company found to be in violation can expect federal litigation, product seizures and lasting damage to brand reputation.

Here we will look at what the FDA requires of cosmetics manufacturers and importers, so your cosmetics company can enter the U.S. market with confidence and generate a loyal following.

What does the FDA consider to be a 'cosmetic'?

The FDA defines cosmetics as: "articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body...for cleansing, beautifying, promoting attractiveness, or altering the appearance" (FD&C Act, sec. 201(i)).

It is important to distinguish between what the FDA considers to be a 'cosmetic' and what they consider to be a 'drug', because any cosmetic which claims to provide a treatment, like anti-wrinkle cream, would be considered both, and thus be subject to more stringent 'drug' classification enforcement. Under the FD&C Act, drugs generally require FDA pre-approval before they can be marketed. (For more information about how the FDA distinguishes cosmetics from drugs, as well as soaps, take a look at their page.)

If your product is purely a 'cosmetic' according to the FDA definition, neither the finished product nor its ingredients require FDA approval before marketing (with the exception of color additives, which do require pre-approval).

What is an 'adulterated' cosmetic?

'Adulteration' is the term used to describe a violation of safe cosmetic composition as a result of "[the] ingredients [used], contaminants, processing, packaging or shipping and handling." Generally, a cosmetic has been considered adulterated if the composition:

• Contains a poisonous or deleterious substance which would cause harm under prescribed use
• Contains any filthy, putrid or decomposed substance
• Has been prepared, packaged or stored in unsanitary conditions
• Is packaged in any poisonous or deleterious materials
• Contains an unsafe color additive as defined by section 721(a) of the FD&C Act (with the exception of coal-tar hair dyes).

What is a 'misbranded' cosmetic?

A cosmetic is considered to be 'misbranded' if the product has been improperly labeled or deceptively packaged. A cosmetic product will violate FDA labeling regulations if:

• Its labeling is false or misleading
• Any required information, including safe-usage directions, is missing
• Required information is not printed clearly and conspicuously.
• Labeling does not include applicable warnings based on the Poison Prevention Packaging Act of 1970 to protect children.

Who is responsible for verifying the safety of a cosmetic product?

The FDA places responsibility for all safety testing and data records on the cosmetics manufacturer and/or importer. As stated, you are not required to pre-register either the cosmetic product or its ingredients (with the exception of color additives) with the administration, nor are you required to share safety data with them. Product safety information is voluntary; however, the FDA does encourage product and ingredient registration through the Voluntary Cosmetic Registration Program (VCRP).

The FDA considers previously conducted toxicological safety reports to be valid substantiations of any product with the same ingredients or a similar overall composition. However, it is important to be aware of all substances which the FDA has prohibited from use as an ingredient, such as chloroform and bithionol; as well as substances, like mercury compounds, which would result in a 'cosmetic' product being reclassified as a 'drug'. If you are unaware of these specifics, you could commit an 'adulteration' or 'misbranding' violation without knowing it. Here is a more detailed list of prohibited and restricted substances.

How does the FDA enforce cosmetic regulations?

The FDA does not have the authority to order a product recall for cosmetics found to be in violation of stated laws, however, it can:

• Make a recall recommendation to the company in question
• Monitor the progress of a product recall
• Request that the company issues a public notification if considered necessary for public safety
• Issue their own press release concerning the product in question if the company delays issuing their own.

For cosmetic products found to be adulterated and misbranded, the FDA does have the authority to seek product removal or seizure through the federal court system, along with a restraining order against further distribution.

The FDA also works with the U.S. Customs and Border Protection to prevent violative cosmetics from entering the country. If your cosmetic product is refused entry into the U.S. over a regulatory violation, your company and the product in question will be made public on the FDA's Import Refusal Report.

Does the FDA require the use of certain product testing labs before marketing?

The FDA does not:

• Require third-party lab testing before marketing cosmetics
• Conduct their own pre-market safety tests -- although they may collect samples as part of a cosmetic facility or import inspection, as well as a follow-up to safety complaints against the cosmetic
• Recommend any particular testing laboratory.

Once again, the responsibility to ensure that a cosmetic product is safe for consumption in the USA falls squarely on the manufacturer, marketer and importer. The FDA gives companies the opportunity to introduce their safe cosmetics to the US market as they see fit, while the agency concentrates their efforts on enforcement against product safety violations. Thus, because the FDA does not require registration prior to marketing, or necessarily inspect every batch at the border, some cosmetic manufacturing and importing companies may believe that they are in the clear to sell potentially harmful cosmetics to American consumers. However, they will inevitably find out that:

1. Adulterated and misbranded products will eventually be exposed -- both to the authorities and the buying public.
2. Being found in violation after the product in question has been widely circulated is much more costly in terms of dollars, brand reputation and customer retention.

With this in mind, expert laboratory testing, production monitoring, as well as pre-shipment and labeling inspections are still the best way to ensure that your cosmetic product consistently meets all U.S. regulations for as long as it is being sold.

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