After a bad batch of shampoo made some customers hair fall out, the New York Times ran a front page story on Tuesday asking whether Congress should give the Food and Drug Administration more regulatory authority over hair and skin products.
The entire piece is an exercise in "do-somethingism," since there are already better ways for the market—and yes, even the government—to deal with the problems created by Wen Hair Care, the shampoo product at the center of a $26 million class action lawsuit. It appears that the article was prompted by ongoing congressional efforts to apply more regulations to the cosmetics industry and give the FDA authority to issue recalls of skin and hair products.
More on that in a moment. First, the facts.
The piece starts off wanting you to know that Los Angeles hairstylist Chaz Dean made "millions" by selling a variety of scented hair care products. Those same products ended up prompting more than 21,000 complaints from consumers who experienced unwanted itching, rashes and even widespread hair loss after using Dean's Wen Hair Care products.
Without even pausing to consider whether those people have another sort of recourse besides an expensive expansion of federal regulatory power (spoiler alert: they do), the Times turns to U.S. Sens. Dianne Feinstein, D-California, and Susan Collins, R-Maine, who are pitching new legislation to require the FDA to do additional testing of cosmetic products and give the FDA authority to issue mandatory recalls for "products found to be unsafe."
There's good reason to feel sympathy for the victims here—no one expects to end up temporarily bald because they purchased a bottle of supposedly "revolutionary" shampoo and they are right to be upset about it—but the lack of federal regulations on cosmetics didn't cause this problem and isn't the best way to fix it.
Let's start by looking at what happened to those "millions" that Chaz Dean made by apparently swindling unsuspecting consumers.
A class action lawsuit against Wen Hair Care and its manufacturer, Guthy-Renker LLC, resulted in a $26 million settlement for the plaintiffs. The settlement awards $25 to any person who bought a bottle of Wen and up to $20,000 to anyone who experienced bodily harm or hair loss after using the product.
That's how the government should be involved in a situation like this: in a judiciary role to work out a settlement between the aggrieved parties and the business responsible for misleading them. The system works!
The Times article suggests this application of government is not enough; that the federal authorities must be more active to prevent this sort of thing from happening at all or at least to respond more quickly when it does. The FDA must be able to force companies to recall potentially problematic products, Feinstein and Collins argue.
When trying to decide whether the government should have the authority to force businesses to recall products, it's important to know how recalls work. In almost all cases, recalls are voluntary actions taken by manufacturers. That's true whether we're talking about cosmetic products regulated by the FDA or whether you're looking how the National Highway Traffic Safety Administration oversees recalls of defective automotive parts.
Even when comes to issues of food safety—certainly an area where there is a greater potential threat to public health and safety than what is created by bad shampoo—the FDA can only request a recall. The final decision rests with the food supplier, and oftentimes businesses will initiate their own recalls without being asked by the FDA because it's generally accepted that lying to your customers or making them sick isn't good for business.
The same is true here. Good cosmetic businesses will issue recalls of faulty products as a way to maintain consumer trust (and to avoid the kinds of class action lawsuits like the one brought against Wen in this instance). Businesses that provide bad products and then don't come clean about the problems—no matter what industry they are a part of—won't stay in business for long.
At the risk of sounding facetious: shampoo that causes baldness is already pretty bad for business, even before the $25 million lawsuits start rolling in.
To recap: the people who were negatively affected by Wen Hair Care were compensated for their losses and the FDA has the same authority over recalls for cosmetic products as it does over recalls related to food safety or anything else.
What more could you want the government to do in this situation?
Feinstein and Collins want to pile more regulations onto the cosmetic industry. In addition to letting the FDA issue mandatory recalls, their bill would require the FDA to test all cosmetic products that contain at least one of five common ingredients. That's going to cost an estimated $20 billion annually, with the funds being extracted from the cosmetic industry in the form of new "fees."
This legislation is important, we're told by U.S. Rep. Frank Pallone Jr., D-New Jersey, because "there is effectively no regulation of cosmetics."
Except there is. The FDA's website explains that it "monitors the safety of cosmetic products that are being marketed and acts on products that are established to be harmful to consumers when used as intended." It does that by conducting inspections of manufacturing facilities and by surveying products on the market "especially if aware of a potential problem." That information is used to alert consumers, support regulatory actions or issue guidance for industry, the FDA says.
The Times touts the fact that the bill has "won the endorsement of heavyweights" in the cosmetic industry, including Clinique, Johnson & Johnson, MAC and Procter and Gamble.
Opposition comes from the Independent Cosmetic Manufacturers and Distributors, a trade group that represents portions of the industry generally not large enough to be household names and not wealthy enough to hire their own lobbyists.
This is the same story that often plays out when government tries to increase regulations. Larger companies—like those "heavyweights" of the industry rattled off by the Times—are better able to absorb the added cost of regulations and will support the expansion of regulations as a way to hurt smaller competitors. This is the same dynamic driving the FDA's expensive, destrutive and unnecessary regulations of electronic cigarettes, by the way.
In a statement to Reason, the Independent Cosmetic Manufacturers and Distributors said it did not support the Feinstein-Collins bill because "it placed too large a burden on small business, did not provide reasonable national uniformity, and would, if passed, stifle innovation in the cosmetics and personal care industry."
There's no way to know whether more testing and regulations would have caught the problems with Wen Hair Care shampoo before it hit store shelves, but the people injured have been compensated and the company paid the price for making a bad product.
One business' mistake should not be a reason to add to the regulatory burden faced by all others in the same field.