7 Legal Steps Every Cosmetic Startup Must Take Before Launch
- Bustos Law Group
- 3 days ago
- 5 min read
You've perfected your formula, designed stunning packaging, and you're ready to launch your cosmetic brand.
But before you start selling, there's a legal minefield to navigate. Skip even one of these steps, and you could face costly recalls, regulatory action, or lawsuits that sink your business.
The cosmetic industry is more regulated than most entrepreneurs realize, especially after the Modernization of Cosmetics Regulation Act of 2022 (MoCRA) dramatically expanded FDA authority.
Here are 7 legal steps every cosmetic startup must take from day one.
1. Understand If You're Selling a Cosmetic or a Drug
This distinction is critical. The FDA doesn't care what you think you're selling—they care about what your label claims your product does. Get this wrong, and you'll face an entirely different set of regulations.
According to the FDA, a product is a cosmetic if it's used for cleansing, enhancing appearance, or changing appearance. It's a drug if it treats an illness, prevents a disease, or affects the way the body works [1].
The trap most startups fall into: Making physiological claims. The moment you claim your face cream "heals acne" or your serum "reduces wrinkles," you've crossed into drug territory. Drugs require pre-market approval and extensive regulatory paperwork.
Action Step: Review every piece of marketing copy and label. Remove any language that suggests your product treats, cures, or prevents a medical condition. Stick to cosmetic claims.
2. Register Your Facility and List Your Products (MoCRA Compliance)
MoCRA changed the game for cosmetic manufacturers. As of July 1, 2024, most cosmetic facilities must register with the FDA and list their products. This isn't optional.
Who must register: Manufacturers and processors must register their facilities with the FDA and renew every two years [2].
Who must list products: The "responsible person" (the manufacturer, packer, or distributor whose name appears on the label) must list each marketed product, including all ingredients, and update annually [2].
Small business exemption: MoCRA exempts certain small businesses from registration and listing. However, this exemption does NOT apply if you manufacture eye products, injectables, internal-use products, or long-wear products [2].
Action Step: Visit the FDA's "Cosmetics Direct" portal to determine if you need to register. If you do, complete your registration before you start selling.
3. Master Your Labeling Requirements
Your label is your legal contract with the consumer. Get it wrong, and your product is "misbranded" under federal law.
Under the Federal Food, Drug, and Cosmetic Act, your cosmetic is misbranded if the labeling is false or misleading, if it doesn't state the manufacturer's name and address, if it doesn't list the net quantity of contents, or if required information isn't prominently displayed [3].
What your label must include:
Name and place of business of manufacturer, packer, or distributor
Street address, city, state, ZIP code
Net quantity of contents
Ingredient list (in descending order of predominance)
Directions for safe use and necessary warnings
All text in English, fully legible, reasonable font size
The "natural" and "organic" trap: The FDA has not defined "natural" for cosmetics, so you can use it—but don't use it in your ingredient statement (that's a violation). "Organic" is regulated by the USDA for agricultural products, not cosmetics [1].
Action Step: Have a labeling consultant or attorney review your labels before printing. One mistake can cost thousands in reprints and lost inventory.
4. Ensure Your Ingredients Are Safe (And Prove It)
The FDA does not require pre-market approval for cosmetics, but you are legally responsible for ensuring your products are safe for consumers when used as directed [3].
Safety substantiation is mandatory: You must have adequate substantiation of safety, which means tests, studies, research, or other evidence considered sufficient by qualified experts. Animal testing is not required [1].
Two ways to substantiate safety:
Rely on existing toxicological data on individual ingredients and similar formulations.
Conduct additional toxicological tests as appropriate [1].
Check for prohibited ingredients: The FDA prohibits or restricts several ingredients in cosmetics (21 CFR 700.11-700.35).
Action Step: Use the Cosmetic Ingredient Review (CIR) database to verify the safety and regulatory limits of every ingredient. Invest in stability testing and preservative efficacy testing (PET) to ensure your products are safe throughout their shelf life.
5. Handle Color Additives Correctly
Color additives are one of the most heavily regulated aspects of cosmetics. Unlike other ingredients, color additives must be approved by the FDA for their intended use, and some require batch certification in FDA labs [1].
Two types of approval:
Color additives that can be used without batch certification
Color additives that must have batch certification
The eye area rule: Unless a color additive is explicitly approved for use in the eye area, it is NOT permitted there. This is a common violation that can result in recalls.
Action Step: Cross-reference every colorant in your formula with the FDA's list of approved color additives. Pay close attention to the "uses and restrictions" column.
6. Get Product Liability Insurance (Before You Need It)
Product liability insurance isn't legally required, but it's financial suicide to skip it. As a cosmetics company, you are ultimately responsible for any damage or injury your products cause to consumers. One allergic reaction, one contamination incident, one lawsuit—and your business could be over [3].
What to look for in a policy:
Product liability coverage (covers claims related to product defects or injuries)
Public liability coverage (covers incidents at market stalls, trade shows, or retail locations)
Coverage limits appropriate for your sales volume
Action Step: Get quotes from at least three insurers who specialize in cosmetics. Get covered before you launch. Bustos Law Group has proven expertise in cosmetic compliance.
7. Establish a Recall Procedure (And Use Batch Codes)
If you have a product on the market, you must have a recall procedure in place. This isn't just good practice, it's a legal necessity. Without a clear recall plan, you won't be able to act quickly if something goes wrong [3].
Batch codes are non-negotiable: Every product must have a unique batch code that changes with every new batch. In the event of a recall, consumers need to know which specific batches are affected.
Your recall plan should include:
A clear chain of command (who decides to recall?)
A communication plan (how will you notify customers, retailers, and the FDA?)
A process for retrieving and disposing of affected products
Documentation procedures
Action Step: Draft a recall procedure before your first product ships. Run a tabletop exercise with your team to ensure everyone knows their role.
The Bottom Line: Compliance Is Your Competitive Advantage
Too many cosmetic startups treat legal compliance as a box-checking exercise. That's a mistake. In an industry where consumer trust is everything, a strong compliance foundation is your competitive advantage. It protects your customers, your reputation, and your business.
The cosmetic industry is more regulated than ever, and MoCRA has raised the bar significantly. But with the right legal foundation, you can launch with confidence and build a brand that lasts.
Bustos Law Group is offering legal FDA compliance guidance to a cosmetic brand. Contact us today!
References
[1] U.S. Food and Drug Administration. "Small Businesses & Homemade Cosmetics: Fact Sheet." https://www.fda.gov/cosmetics/resources-industry-cosmetics/small-businesses-homemade-cosmetics-fact-sheet
[2] U.S. Food and Drug Administration. "Registration & Listing of Cosmetic Product Facilities and Products." https://www.fda.gov/cosmetics/registration-listing-cosmetic-product-facilities-and-products
[3] The Cosmetic Formulator. (2024, April 22). "What are the legal requirements to start a cosmetic brand in the USA." https://www.thecosmeticformulator.com/post/what-are-the-legal-requirements-to-start-a-cosmetic-brand-in-the-usa