Legal Concerns Archives - Page 3 of 4

Competing Oraganic & Natural Certifications

September 9, 2008 Filed Under: Business Musings

The eco-chic trend is the all rage these days. It’s about decadence and pampering while being friendly and gentle to our environment and bodies. The trend is taking off and so are the prices of many organic products.

In the United States, the USDA has a certification program but it’s primarily there to address the needs of food and edible products, not beauty products. France has their Ecocert program and the UK has the Soil Association. The Soil Association will certify beauty products as organic and charge for this based on a sliding fee scale of revenue. Back in the U.S., the “big dogs” (like Whole Foods) are trying codify the standards for natural body and beauty products.Here are three new certification labels to watch for in the fight for dominance of this space in the beauty industry.

Whole Foods has a product line called Nude that launched in 2004 and is sealed with a Premium Body Care label. The label identifies over 250 ingredients that are unacceptable for products including parabens, sodium lauryl sulfates and polyethylene glycols (check out the entire list here). To meet this label’s standards the product must pass the test by using the mildest of preservatives, the safest surfactants and premium standard fragrances oils.

OASIS (Organic And Sustainable Industry Standards) is a standard represented by companies such as Estee Lauder and L’Oreal. To seal your products with the OASIS label, the product must be 85 % certified organic (and soon to be 95 %, wowza!). Keep an eye out for the OASIS seal, it’s said to be coming out sometime this year.

The IOS cosmetic standards one of North America’s first system certification standard for organic and natural cosmetics. To meet this label’s standard the product must be 95% of natural origin and include recyclable packaging. It also must be manufactured with out producing any toxins.

What does this mean for the little guys? It means that potential customers will become more educated about the terms “natural” and “organic” and ask you more clarifying questions prior to purchasing. If you want to stay in the running for these categories, you’ll need to be extra careful about the ingredients that go into your products.One of my concerns around all of this codifying and competing “seals of approval” is the cost to keep up. I have a sneaking suspicion that these changes might push out the little guys (certification can be expensive), leaving total domination of the natural and organic body care industry to those that can afford it (i.e. well established, larger brands).

Washington DC Report – FDA Act – 2008

August 8, 2008 Filed Under: Bramble Berry News, Business Musings

I’m fresh back from the Washington DC fact finding and information sharing trip. If you missed the background of this trip or the FDA Globalization Act of 2008, click here to read about it. It was a well planned out, busy day, shared with invigorating company.

A big “Thank You” to Donna Maria Coles Johnson of the Indie Beauty Network for setting up a whirlwind tour from Maryland to DC on behalf of small home based crafters everywhere. To kick things off in the right way, I made a few bars of this fun John Kerry soap to leave behind, along with our briefing packet. At the very least, it’ll help with a good laugh.

Our first meeting of the day was with the Director for the FDA’s Office of Cosmetics & Colors, Dr. Linda Katz. Dr. Katz and Patricia Hansen, Ph.D., a Deputy Director were gracious enough to explain their position with regards to the FDA Globalization Act of 2008. If the legislation becomes law, it is the FDA that will promulgate the rules and regulations to implement it.

During our meeting, we described our position with regard to the draft law. For example, we explained how the requirement that having to file paperwork listing each product and each ingredient in each product every time a new product was sold would be a lot of extra red tape for a small business. Here’s a fun photo of Jamila White of j.blossom and Donna Maria from IBN posing, right before the meeting started.

Dr. Katz and Dr. Hansen gave us some additional information about the reporting systems currently in place and felt strongly that the systems were manageable for a small business, since they were computerized. They also offered to meet with industry representatives in person, at a conference for example, to train small businesses on various reporting structures. They reminded us that fees are not anything the FDA has input on. They are set by Congress.

So, off to Congress we went.

We took the Metro from Maryland (where the FDA offices are) to downtown DC to meet with a staffer for Senator John Kerry. Kerry is the Chairman of the Senate Committee on Small Business and Entrepreneurship and is a strong advocate for women owned businesses everywhere. Senator Kerry’s staffer took copious notes and expressed significant interest in following the draft legislation as it becomes a bill (if that happens). She pointed out that Senator Kerry has no official role in the process until draft legislation becomes a bill, and then moves from the house to the Senate. She thoughtfully offered to follow the legislation to ensure Senator Kerry would be well informed if and when the bill comes up for a vote. Here is a photo of Donna Maria and I in front of the famous Swifboat photos in Senator Kerry’s office.

After a short lunch in the Metro Station (wow! What a great variety of food they had in there!), we were off to meet with Virgil Miller, the professional staff member in the House Energy & Commerce committee, where this legislation originated and is now pending. Mr. Miller was very kind and listened to our concerns. He explained Congressman Dingell’s (co-sponsor of the draft legislation) reasons for introducing the draft legislation and expressed surprised at the very existence of our small handmade industry.

Jamila White of j.blossom and Lela Barker from Bella Lucce took to the floor to speak passionately about the burdensome fee requirements. It was very gratifying to be listened to with an open mind. After we all had a chance to speak about the potential reporting requirements and fees, he gave us an opening to potentially help shape the final draft of this bill. Specifically, he requested that Donna Maria take the lead in proposing alternatives to the fee structure and reporting requirements now contained in the draft. Donna Maria is looking forward to working closely with IBN members on forming an exemption for small businesses or perhaps a sliding fee fee structure based on the size of impacted businesses. It was great to be asked to participate. Here’s a photo of Donna Maria with Lela Barker from Belle Lucce, riding the metro.

And, like dessert, it’s good to save the best for last. We met with the Deputy Communications Director and another staffer in Congressman Jesse Jackson Jr.’S OFFICE. They were very surprised to hear about the potential unintended consequences of the draft discussion framework and agreed that it seemed like an oversight to impose fees and paperwork requirements that would essentially tax small businesses heavily, perhaps even right out of existence. The staffers had some very interesting ideas for getting press for the small business cause, as well as helpful suggestions for working within the current framework of the House/Senate bill session. The two staffers we met with were funny, witty and charming. It was almost like sitting down for coffee with good friends.

After that last meeting, we were tired but in high spirits to meet with soapers who had driven up to 3 hours to meet us at California Pizza Kitchen (a tip: their White Pizza is delicious!) for debriefing and some great food. Here’s a photo of our merry group. That’s Jamila White from j.blossom with the closed laptop. She jumped right on the internet to do some research, right at the table. Now that’s a perfect example of an entrepreneur – always thinking and willing to do what it takes to get the job done – even if it’s during dinner!

The camaraderie was high and it was an honor to put a face to the names I see online. The main clearing center, the woman who is focusing much of her current time on this potential legislation, however is Donna Maria. Her blog is here. You should check it regularly as well for updates on where the draft discussion framework is going. I’ll also keep you posted on what is going on with this legislation through this blog as well.

The Law with Unintended Consequences

August 1, 2008 Filed Under: Business Musings

Recently, the FDA (U.S. Food and Drug Administration) announced that it was considering legislation to strengthen food, drug and cosmetic safety (see the Draft Discussion here). While I sincerely believe that the FDA and all that testified on behalf of the legislation have the consumers’ best interests at heart, I am deeply concerned about the unintended consequences of this action. I am so concerned about the ramifications of this legislation that I will be heading to Washington DC next week to speak on behalf of Bramble Berry’s customer base and add my voice to all of you who have worked hard to turn this hobby into a business. Joining me will be three amazing women: Donna Maria Coles Johnson from the Indie Beauty Network, Lela Barker from Belle Lucce, Jamila White from jBlossom.com and Kayla Fioravanti from Essential Wholesale. We will be meeting with staff of the House Energy & Commerce Committee (under whom this discussion framework is moving forward), Senator Kerry (Senator Kerry chairs the Senate Committee on Small Business & Entrepreneurship) and the Deputy Press Secretary for Congressman Jesse Jackson Jr. Rep. Jackson serves on the Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies.

In a nutshell, the FDA Globalization Act of 2008, is designed to impose stringent monitoring, manufacturing and reporting requirements on all products under FDA purview. The “Cosmetics” portion of the bill is actually very small (1/64th of the entire bill) in relation to the “Food” portion. None the less, the implications for small, home based crafters and cosmetic manufacturers, is concerning.

This legislation is coming at a time when cosmetics and personal care consumers have never had more choice, nor have the products they have to choose from ever been more safe. Just look at these quotes from experts:

Pamela Bailey, President of the Personal Care Products Councill (formerly CFTA), stated in her April 12th testimony to the Energy & Commerce Committee, “Cosmetics and Personal Care Products are the safest category regulated by the FDA.”

Additionally, Stephen F. Sundolff of the Center for Food Safety and Applied Nutrition stated, “The FDA’s oversight has ensured that the Nation’s cosmetics are among the safest in the world.”

The experts quoted above believe the system is already working and we here at Bramble Berry are pleased to help you make some of the most useful, safe and innovative products in the country.

Consumer safety is important to me. I am a strong advocate of proper ingredients labeling, best manufacturing practices and education. As Bramble Berry’s founder and CEO, I am consistently impressed with your commitment to the safety and purity of your products. This is why I am so concerned about this legislation.

With this potential legislation at our doorstep, it imperative that you review all of your products, formulations and manufacturing practices to ensure that you are within full compliance of all current laws for home crafters and cosmetic manufacturers. This new proposed legislation will do nothing to strengthen the cosmetics industry safety. Rather it will just be a bigger burden which could force some small producers out of the market.

The areas in the current discussion framework which I find particularly disturbing are:

• Requirements that you register all of your formulations with the FDA – Cosmetic manufacturers select from a list of approved ingredients generally regarded as safe by the FDA. This rule would add another unnecessary burdensome reporting requirement onto small businesses. Who exactly of the 18 people currently employed by the FDA to oversee Cosmetics is going to look at the formulations? If there were 100,000 large and small manufacturers, each with 25 formulations … well, that’s a lot of paperwork to go through! Not to mention, as a small business owner, you’re already doing enough, stressed to the max and now you’re going to need to fill out forms rather than work on bettering your business? Yikes. Talk about tying your hands with red tape. Consider also the stifling effect such a reporting requirement will have on new product innovation, or even minor improvements made to old products.

• Requirements that you report all “Potential Adverse Reactions” to the FDA – Again, through self-regulation (GRAS list, The Cosmetic Ingredient Review (CIR) and Cosmetic Ingredient Dictionary) there is a comprehensive list of approved (and not approved) ingredients to use. Who is to say what a “potential adverse reaction” might be? I might have an adverse reaction to the foundation I just made … if I put it directly on my eye. No one can legislate or know what consumers do with our end products. Why would the government want us to even try? According to the Personal Care Council, every year, out of 11 BILLION personal care products sold, there are less than 150 adverse reactions. That’s a safety factor of .00000000136%. There is no evidence that the current laws and regulations are not working. In fact, the excellent safety record of the Cosmetics Industry proves the contrary.

• Fees, fees and more fees will jeopardize businesses all over America. In uncertain economic times, it is imperative that Americans have choices about how they earn their money. At the minimum, this act would require a registration fee of between $2000 up to $12,000 per year, no exceptions. 95% of Bramble Berry’s extensive customer base would not be able to bear this burden. In fact, only 40% of our customer base grosses over $250 in sales per month. Yet, it is from this very customer base that the next Mary Kay or Estee Lauder may arise.

Just think of how these three points might affect YOUR business. The time to act is now. This law has many unintended consequences. Rather than strengthening the cosmetics industry, it will force thousands of small producers out of the market. And, where there is less choice, there is always a higher price in the end.

If you haven’t yet signed the petition, there is still time. Head to Indie Beauty Network’s site here. Be sure to sign your name, business name and city and state.

I’ll be in DC next week – let me know what you think is important for the committee to hear. What would you tell them? I’d love to meet you at the Indie’s In the City meet-up after our busy day of meetings on the Hill. Learn more about that meet-up and RSVP here.

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Resources & Links referenced in the post:

Committee on Energy & Commerce: http://energycommerce.house.gov/FDAGlobalAct-08/index.shtml
Discussion Draft Legislation: http://energycommerce.house.gov/FDAGlobalAct-08/Dingel_60AXML.pdf
Testimony of Janet Woodcock, M.D., Director, Center for Drug Evaluation and Research http://www.fda.gov/ola/2008/fdaglobalact050108.html
Testimony of Stephen Sundolff for Center for Food Safety And Applied Nutrition http://www.fda.gov/ola/2008/devices051408.html
Testimony of Patricia Bailey of the Personal Care Products Council http://energycommerce.house.gov/cmte_mtgs/110-he-hrg.051408.DiscDraftCosmetics.shtml
Testimony of Center for Science in the Public Interest: http://www.cspinet.org/foodsafety/fdaglobalizationact.pdf

FDA Globalization Act

July 30, 2008 Filed Under: Business Musings

The Organic Beauty Expert posted her views on the proposed FDA Globalization Act of 2008.

Excerpted from the blog post – read the rest of it here:

…the main issue is this: the American government was not created to obstruct the ability of man to create or trade. One should not have to ask permission to make a lawful living. Free men don’t ask permission; slaves ask for permission. And by the way, big beauty and their corporations, such as Estee Lauder, were mostly created by women. Women who were sitting in their kitchens with nothing but an idea. This FDA Globalization Act would essentially strip away what these women and many others like them, have created.

Join Me, in D.C.

July 28, 2008 Filed Under: Bramble Berry News

Donna Maria and I are headed to Washington DC to meet with staffers for the House Energy & Commerce Committee about new proposed legislation that may have an adverse effect on toiletry manufacturers throughout the nation. If you haven’t read about it, click here to be taken to the Indie Beauty Network website to read about it. Sign the petition if you feel strongly.

Join Donna Maria and I for a short debriefing session, networking and lots of business information sharing after our meeting. We won’t just be talking about the FDA act and business – it’ll be lots of fun to meet everyone and learn more about you. If you’d like to join us on August 5th at 5:30, please RSVP on Donna Maria’s blog here.

Information about FDA Globalization Act (video)

June 24, 2008 Filed Under: Business Musings

Visa and MasterCard Rules in Business

March 4, 2008 Filed Under: Bramble Berry News

I recently read a great letter to the editor in the Puget Sound Business Journal. The letter, written by Emery Shrock in Milton, WA, discussed the stranglehold that Visa and Mastercard have on all businesses (and especially on internet-based businesses). In part, he said:

As a longtime retailer, I find the discounts and feed charged to the merchant gradually rising – not because the card issuer’s costs are rising, but because they can get the higher fees, and the merchants can’t do much about it.

Bramble Berry’s fees have risen exponentially in the last 10 years, routinely topping 4% of the transaction if the customer is using a premium card or particularly lucrative reward card.

Visa announced in 2006 that it would go IPO and be a publically traded company. Mastercard is already a publically traded company, selling at over $200 per share, with most analysts saying it will outperform the market in 2008.

Well, at least someone’s making money off of my $4. And, it might as well be me … next time I save $1000, you can bet I’ll be looking into buying shares in this monopoly.

Shrock also singled out the difficulty in dealing with fraudulent cards, by stating:

The rules are set up so that the merchant generally takes the fall for accepting a card in good faith that proves to be a fraud. The fraudlent transaction is simply charged back against the merchant, who may be penalized by higher fees if he has too many such “chargebacks.”

This is also true in our case. At Bramble Berry, money for a charge will be withdrawn from our account before we even get the paperwork. Fighting chargebacks is time and labor intensive, in part because our card processor doesn’t give us the name of the customer, only the amount of the transaction and the date that it cleared the customer’s account. Finding the name, pulling the internet order, the accounting version of the order, and the credit card slip, the Fed Ex delivery signature and then writing a long essay on the fact that the customer received the products, at the address that the bill goes to, does not ensure that we will get our money back. In the 10 years I’ve been accepting Visa and Mastercard, I do not recall winning one single chargeback – even the one where the local police actually got involved and charged the customer with fraud.

Sadly, I don’t see a way around this. PayPal (which we started taking at the end of 2007) fees are higher, the system byzantine and difficult to work with and is not a legitimate version of Visa and Mastercard in terms of reporting ease. No one pays with checks or money order any more – why would you? Visa and Mastercard are much more convnient.

But, someone’s paying for this convenience and it’s not the consumer – it’s me. The vendor. At a rate of $4 for every $100 I take in.

David Versus Goliath, the E-Bay Way

November 4, 2007 Filed Under: Business Musings

In a case reminiscent of the Coty J-Lo Glow versus GLOW back in 2002 – 2003, there’s another David and Goliath match up in the scent world. If you’re not familiar with the GLOW case, click here to read a great article by Inc. magazine about that lawsuit. Jennifer Lopez and Coty settled out of court in this case. Click here to read that short press release.

The short story for the new David and Goliath suit is: E-Bay decided in 2001 that PerfumeBay was too close a name for their liking. E-Bay believes that the word “Bay” is so closely identified with E-Bay that anyone using the term “Bay” in their name is descriptively misleading to potential consumers. So, E-Bay sued Jackie Tran and her small company.

Jackie fought back. And, she won on almost every count. But this is America where the end of a court case never seems to be the actual end. The court asked Jackie to change her name to perfume (space) bay.com. Worried about losing her rankings in search engines and the 300,000 customers she currently has, Jackie chose to take her case on to the Appellate Court in the hopes of keeping her original URL.

Her full story can be found on her blog MakesNoScents.com .Check it out when you have a few moments to spare. Then, think about growth plans for your business. If you’re thinking about growing big, big, big, consider investing in a $500 Trademark Review with your local Intellectual Property Attorney. It might save you heartache and headache when you do get that first million dollar nationwide distribution agreement.

Clorox Buys Burt’s Bees

November 2, 2007 Filed Under: Business Musings

Bleach manufacturer Clorox is the latest big player to muscle into the naturals market with the acquisition of Burt’s Bees for $925m.

Large companies are beginning to pick off small natural and organic personal care firms to capitalise on the growth of the niche market and ultimately boost its top-line growth.

On its current double-digit growth path Burts Beesis set to achieve sales of $170m in 2007, which is around five times less than the price Cloroxpaid for the company.

Justifying the high price is the sales potential of Burt’s Bees. Clorox expects the acquisition to provide an additional two points of sales growth in the fiscal years 2008 and 2009.

Clorox CEO Donald Knauss said: “This acquisition allows us to enter a growing market that’s consistent with consumer megatrends.”

“The Burt’s Bees brand is well-anchored in sustainability and health and wellness, and we believe it will benefit from natural and ‘green’ tailwinds”

Organic Monitor director Amarjit Sahota told CosmeticsDesign.com that Colorox will also benefit from the green image of Burt’s Bees.

As for Burt’s Bees, Sahota questioned whether the move would be in the long-term interests of the firm, despite the deal meaning that Burt’s Bees products will be sold through mainstream retail channels.

He said: “We expect Burt’s Bees to become damaged by the acquisition because of its impact on customer and retailer perceptions of the brand.”

In a recent interview with CosmeticsDesign.com Sahato expressed concern that multinationals with strong established retail channels are marginalising smaller brands and selling diluted natural and organic products.

He called for tighter regulation of the naturals market to prevent companies from selling ‘natural’ cosmetics that contain relatively few natural ingredients.

Burt’s Bees, which was previously owned by private equity firm AEA Investors, has been a strong campaigner for greater regulation of natural and organic cosmetics in recent times.

Sahato fears that may not continue after the latest buy-out because of the demands of the mass-market and the fact that Burt’s Bees new parent company has no history of selling natural or organic products.

The takeover of Burt’s Bees follows two major acquisitions of natural personal care players last year, namely L’Oreal’s acquisition of Body Shop and Colgate-Palmolive buy-out of Tom’s of Maine.

Litigious Society

September 26, 2007 Filed Under: Personal Ramblings

I recently received this question from Karen. The question is a serious one involving business and liability insurance. My response to her is below the question.

hi! say i want to make a real strawberries and cream soap(actually i did in Mexico where there are few rules and regulations for soap making;it was a delicious, yummy, creamy bar and no one had any trouble with it- i made a sign saying real strawberries and real cream were in each bar) here in the states and i put all my ingredients on the label. the person breaks out with a rash due to an allergy to strawberries. if i put all the ingredients on the tag,why then, liability insurance? wouldn’t that be up to person to read the label or maybe they didn’t know they were allergic up to that point? i realize insurance is important but isn’t it part of the responsibility of the customer to read the label first? my question may sound silly but just how valuable is liability insurance?? thanks, Karen

Thanks for your note.

If a person breaks out in a rash due to an allergy to strawberries, you could be liable. If a person breaks out in a rash due an allergy to soap, you could be liable. Even if they KNOW that they are allergic and still use the product, you could be liable.

The realities of this happening are slight as most people need to ingest strawberries in order to get an allergic reaction to them. In the 10 years that I’ve been selling to over 29,000 customers, I’ve never heard of anyone being sued *but* that doesn’t mean that it couldn’t and won’t happen.

Our society can be quite litigious when it wants to be. That is why basically all food now says “Processed in a facility that processes nuts” whether it has been or not because the general public has proven itself to be not responsible for reading ingredients labels.

In theory, if common sense law ruled the world, yes, the customer would be responsible for their own actions but when you read about buglers suing home owners for injuries sustained during the burglary, you know that the legal system has gone a bit amuck! =)

The best way to protect yourself against frivolous claims is to make good, safe products and to get product liability insurance. Two places to buy insurance specifically designed for soap and candle makers are: Handcrafted Soap Makers Guild www.soapguild.org has insurance for about $450 per year. Indie Beauty Network also has insurance for $395 per year through a broker. Click here to find out more details about IBN’s insurance.

Shipping Supply Scams

August 31, 2007 Filed Under: Personal Ramblings

My friend Bob blogged about office supply scams a few months ago. Click here to read his take on them. I read his post and enjoyed his writing style but the subject matter wasn’t interesting to me.

Until today when we got a bill for $1,014.95 for products that we didn’t order. The 500 sheets of laser printer cleaner paper came yesterday. We were puzzled but figured that shipping mistakes happen all the time. We weren’t suspicious and assumed it was someone’s mistake and would be easily solved. And then we got the exorbitant invoice.

The bill is for roughly triple what the paper costs at a normal large office chain. According to the invoice, the returns need to all be received within 10 days and there is a non-negotiable 20% restocking fee.

The company in question is in Brooklyn. It will take 10 days (with the vacation day on Monday) for them to receive the product. Of course, now we have to ship the very heavy box back to them at our expense. They charged us $39 to ship it to us in the first place.

Their 1-866 line rings only to a recording and they haven’t returned multiple phone calls.

There has got to be a better way to run a business. If they put half as much effort and energy into acquiring customers in an ethical manner, just think about what kind of a quality company they could build.

$100 million in capital down the drain

July 17, 2007 Filed Under: Personal Ramblings

Sun Rocket, a WA DC based company, competing in the difficult market of VoIP (Voice Over Internet Protocol – or, in laymen’s terms, talking over the internet instead of landlines) just went kaput. It was lights off for the company after burning through $100 million in venture capital in a little over three years.

As late as April, the company was talking up their successes and growth rate, boasting that they had over 200,000 VoIP subscribers, doubling their growth rate.

Quick, someone tell their web site designers that they’re out of business. The Sun Rocket web site still trumpets their low pricing and introductory offer.

Calling angry customers takes guts

June 21, 2007 Filed Under: Business Musings

Kudos to the local PR firm I wrote about earlier this week. They happened upon my blog and read my rant about the $150-per-photo-charge. Rather than cringe in their offices or whine about my lack of understanding, they picked up the phone and called me.

That takes guts.

The PR Firm told me their side of the story. They’re not selling the photographs. They contracted out to a third party photographer for the shoot. The photographer is selling the photographs for $150 per photo. He believes his work is worth $150 per photo.

I still disagree with the price tag but that’s okay. I’m still left with a better feeling about the situation because the PR Firm called me to chat about it.

The outcome didn’t change. The photos are still $150 per photo and I’m still not buying any. But, I feel good that the local guys cared enough to call.

The Governor of Washington is amazing!

May 18, 2007 Filed Under: Bramble Berry News

I had the extreme privilege of meeting with Governor Christine Gregoire (Washington State) yesterday morning at the early morning hour of 7:15 a.m. She came to Bellingham to speak to City Club. She called our non-profit group, The Bellingham Bay Foundation, to get the skinny on the waterfront redevelopment going on here.

Governor Gregoire was funny, smart and lightning fast with her deductive reasoning leaps. She puts two and two together faster than anyone I’ve met (except my Daddy, of course). She had laser like focus during the conversation and gave very pointed feedback.

Now that I’ve met her, I feel even better about voting for her!