Wonder no more, dear reader. The TTB’s recently released Industry Circular 2018-7 details the more common trade practice violations that ongoing enforcement efforts have uncovered.
- Industry members paying fees or providing other things of value to retailers in exchange for display space or shelf space (including designated tap space), commonly referred to as slotting fees. In some cases, such payments are hidden in the company’s books as payments for samplings that never take place.
- Industry members offering sponsorship agreements that are tied into product placement or exclusivity arrangements.
- Industry members using third-party marketing companies to indirectly provide things of value to retailers continues even after the publication of TTB Industry Circular 2012-1, Guidance Regarding Industry Members’ Participation in Retail Programs. Things of value TTB has observed include payments for entertainment at the retail venue and marketing support that includes items or services not specifically excepted under 27 CFR part 6, Subpart D.
- Industry members providing items and services listed in Subpart D as exceptions to 27 CFR 6.21(c), when they are used to violate other provisions of the tied-house regulations. For example, industry members furnishing promotional items such as those covered under the Subpart D exceptions, in exchange for preferential product display space.
- Industry members and retailers altering invoices in an effort to conceal the nature of inducement payments.
- Industry members paying retailers for “events” that never took place.
- Industry members engaging in consignment sales under the pretense of brokerage agreements.
- Industry member employees making false statements to TTB Investigators during interviews, even after being provided the opportunity to amend their statements.
- Industry members illegally operating without a valid Federal permit due to not timely reporting changes of ownership, management, or control over their operations.
You should familiarize yourself with these as it is common for manufacturers. even craft manufacturers, to believe they are properly or lawfully doing things like supporting live entertainment through direct payments to venues that also hold retail licenses when such payments may not follow federal or state procedures or laws. Buybacks of stale product are another item of concern as they typically amount to consignment sales which are unlawful.
Familiarization could lead to self-reporting which can drastically minimize the extent and severity of the enforcement action taken by the TTB:
We encourage each member of the regulated community to voluntarily disclose its own violations upon discovery. Voluntary disclosure will mitigate what actions we take, if any, in response to violations. See TTB Industry Circular 2004-5, Voluntary Disclosure Program.