Recently the Food and Drug Administration issued a warning letter to CytoSport Beverage Company regarding the labeling of its Muscle Milk product, although the Federal Trade Commission has already declined to take action against the company over allegations that the product name was misleading.

In 2009 Nestlé brought a challenge in the National Advertising Division against CytoSport, arguing that Muscle Milk’s product name was false and misleading because the product – sold in grocery and convenience stores alongside milk and other consumer beverages – contains no milk. CytoSport declined to participate in the process, calling its claims “truthful and non-misleading,” and the NAD referred the matter to the FTC and the FDA.

Last May the FTC responded. Despite concern that consumers would be misled that Muscle Milk contains milk when it is in fact a water-based nutritional drink, the agency declined to take an enforcement action because the company “pledged to disclose, prominently and directly below the product name on the front panel of the label, that the product ‘Contains No Milk,’” the FTC said. In addition, the company represented that it was no longer marketing its line of Mighty Milk children’s line of products.

But the FDA took a different approach in its warning letter issued in late June. It determined that despite the “Contains No Milk” disclaimer, the product label is false and misleading because it contains no milk and yet contains ingredients derived from milk, which could mislead consumers who have milk allergies. And even with the disclaimer, the agency said, the product name remained misleading. “These products purport to be milk by prominently featuring the word ‘MILK’ on the labels. Milk is a food for which a definition and standard of identity has been prescribed by regulation,” the FDA said, a standard of identity Muscle Milk failed to meet.

Specific products – like the Chocolate Muscle Milk Protein Nutrition Shake and Chocolate Peanut Caramel Muscle Milk – were further misbranded because they included claims that they were “healthy” and yet exceeded the maximum fat and saturated fat content as prescribed by regulation, the agency said. The Web site for the Vanilla Crème Muscle Milk Light Nutritional Shake also ran afoul of requirements for relative claims, the FDA said, because it failed to provide the identity of the reference food for its “Light” and “lower in calories” claims.

To read the FTC’s letter to CytoSport, click here.

To read the FDA’s warning letter, click here.

Why it matters: Muscle Milk’s experiences provide an interesting case study in regulation by multiple agencies. While the FTC declined to take action against the company once it added the “Contains No Milk” disclaimer, the FDA found that the disclaimer itself could mislead consumers with milk allergies, as the product contains ingredients derived from milk, and that because milk is a regulated food, the product name is misleading.