Import Alert 53-05

"Detention Without Physical Examination of Cosmetics From Importers Exhibiting Five Detentions From Gray Market Purchases"

Orlando District has identified a major labeling problem with Imported "Gray Market" cosmetics. The "Gray Market" involves the by-passing of the authorized U.S. dealer through the importation of a product by a third party from a dealer often located in a country other than the country of origin. The dealer may be an authorized dealer for the product in a foreign country who finds it profitable to increase his volume by selling large quantities of the product to a "Gray Market" dealer in the United States. The consumer readily purchases these products because of a substantial discount which is realized for name brand items.

Since these products are intended to be sold in a country other than the U.S., they are sometimes not labeled in English or in accordance with FDA's other labeling requirements, such as ingredient statements, net contents, etc.

Many different products are involved. Therefore, coverage cannot be limited to specific products, countries or manufacturers. During fiscal year 1983,Orlando District detained 136 entries of cosmetics due to labeling deficiencies. A total of 52 firms were responsible for the 136 detentions. Six had five or more detentions, which demonstrated a pattern of continued violation.

Orlando generally wharf examines the goods if the entry indicates the port of lading is in a country that is different than that of the manufacturer. For example, the Port of Lading may be Cozumel, Mexico but the manufacturer is in France. Orlando also reports that the number of cosmetic entries offered in Orlando District has recently dropped drastically, suggesting that importers may be entering these products at other ports to circumvent FDA coverage.

Districts may detain, without physical examination, all entries of cosmetics offered by the importers identfied in the Red List to this Import Alert. Charge: "The article is violative within the meaning of 801(a)(3) in that it appears to have various labeling deficiencies such as ."

Entry of these cosmetics usually involve a number of products. Detentions may be based on various labeling violations.

The following is offered for guidance when handling these type of multi-
product entries:

When an entry is detained without physical examination and there is indication on behalf of the importer that some products in the entry are in compliance which require no relabeling, while others have labeling deficiencies to some degree, it will be the responsibility of the importer or designated agent to categorize the products as those in complete compliance, those having major labeling violations, and those with minor FPLA violations. The importer will be required to submit copies of all product labels in the entry at the time of detention to the district office for review. Release those products found in complete compliance immediately. Release with comment all products with minor FPLA deficiencies, such as type size.

Keep products with major labeling violations under detention until all label violations (major and minor) are corrected. Major deficiencies include the lack of: 1) name and place of business of the manufacturer, packer, or distributor; 2) an accurate statement of quantity of contents; 3) inqredients statement and; 4) labeling in the English lanquage. Districts may examine relabeled goods before release.

Increased surveillance of [Gray Market] cosmetic products offered by other importers is indicated. Pay special attention to those entries which have a port of lading country different than that of the manufacturer.

Cosmetics

"The article is violative within the meaning of 801(a)(3) in that it appears to have various labeling deficiencies such as ."