| **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. |
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