SILVER SPRING, Md.-- The U.S. Food and Drug Administration (FDA) finalized its guidance language on what retailers of tobacco products can give away to customers, as well as its standards on loyalty programs and discounts.
The final guidelines released last month were published in preliminary form in January 2017 and varies only slightly in its final language, according to Minneapolis-based NATO, a tobacco-retailing association.
Essentially, the document explains how retailers can comply with FDA regulations, which prohibit a retailer, distributor or manufacturer from giving free samples of tobacco products to consumers except through a sales transaction that involves a consumer paying money for a tobacco product. For instance, providing a free sample to a consumer in exchange for information such as an email address or a telephone number is prohibited.
Called "The Prohibition of Distributing Free Samples of Tobacco Products," the FDA guidance document details several additional rules …
Background on free samples
The 2009 Family Smoking Prevention and Tobacco Control Act authorized the FDA to regulate tobacco products and prohibits the distribution of free samples of all tobacco products regulated by the FDA, including cigarettes, cigars, electronic cigarettes and other tobacco products (OTP).
Price promotions, discounts and coupons
The FDA guidance states there are situations in which the sale of a tobacco product at less than full price does not violate the free-sample ban. Such instances include the following:
“Buy one, get one,” “two for the price of one” and any similar combination of buying one or more tobacco products to receive a free tobacco product as a part of the same transaction do not violate the free-sample ban and are allowed. This is because the consumer is paying money so that the free tobacco product is not really free.
Buy one and receive a coupon redeemable later for a free tobacco product is prohibited unless the retailer, distributor or manufacturer has a method to verify that the person redeeming the coupon is the original purchaser that earned the coupon for a free tobacco product.
Tobacco products sold at a discounted price do not violate the free-sample ban.
Coupons can be redeemed that take dollars or cents off the price of the tobacco product, allowing the tobacco product to be sold at a discount.
Membership loyalty programs
The FDA guidance document also explains how retailers can offer customers a membership or loyalty reward program. Here are examples:
Price discounts on tobacco products are allowed in both membership and loyalty programs.
Programs where consumers earn points or rewards for purchasing a certain number of tobacco products and then receive a “reward” of a free tobacco product are allowed provided that the reward product is a part of a monetary transaction. For example, if a customer receives a reward of a free tobacco product after five products are purchased, the free reward product would need to be given to the consumer at the time the fifth product is bought or with a sixth or later purchase of a tobacco product. However, the FDA would allow the free-reward product to be given free of charge to the consumer without a money transaction if the retailer, distributor or manufacturer has a method to verify that the consumer redeeming the reward is the original purchaser that earned the reward. One method of verification may be through the consumer’s loyalty membership card.
The FDA guidance states that the agency does not intend to enforce the free-product sample ban in a business-to-business transaction, where free samples are distributed in limited quantities between a manufacturer and a distributor, a manufacturer and a retailer, or a distributor and a retailer. “Limited quantities” is defined as no more than necessary to achieve a business or marketing goal to make a business aware of a product in order to encourage the purchase of the product. A package of a product may be considered “limited,” while a case may not be limited.
Games of chance
Finally, the FDA guidance states that contests or games of chance are not prohibited under the free-sample ban, but the prize cannot be a tobacco product unless the prize is given as a part of a tobacco-product sales transaction involving an exchange of money. The FDA guidance does not clarify whether the purchase of a ticket for a chance to win a tobacco product would be allowed under the free-sample ban. However, the FDA guidance does allow customers to enter into a drawing or raffle for a prize of either a discount in the price of a tobacco product or a coupon for a free tobacco product at the time another tobacco product is purchased.
In addition, retailers may need to comply with other state and federal laws regarding games of chance, NATO officials said.