FTC rules on advertising sunscreen as “all natural.”

The Federal Trade Commission has ruled that California Naturel, Inc. falsely advertised its sunscreen product as “all natural” in violation of the FTC Act. Despite the company’s “all natural claim,” the sunscreen contains 8% dimethicone, a synthetic substance.

Last week, the Commission issued an order [PDF] prohibiting California Naturel from misrepresenting the ingredients or composition of its products, including whether the product is “all natural” or “100% natural” or any environmental or health benefits of the product. The company must have competent and reliable scientific evidence supporting its claims about the content and ingredients in its products. The Order also requires California Naturel to submit a report to the Commission, within 60 days, detailing its compliance with the Order.

In April, we reported that the FTC proposed settlements with four other personal care product manufacturers and issued an administrative complaint to California Naturel for marketing sunscreen as “all natural” even though it contained dimethicone. California Naturel also advertised that it “uses only the purest, most luxurious and effective ingredients found in nature.” The company did not dispute that the product contained 8% dimethicone, nor that dimethicone is a synthetic ingredient.

According to the Commission’s Opinion [PDF], California Naturel added a disclaimer at the bottom of the product webpage in early 2016, after the FTC began its investigation, stating: “The FTC requires us to add the following: ‘Dimethicone, a synthetic ingredient, is 8% of the sunscreen formula, the remaining 92% are natural products.’” However, the Commission found that the net impression created by California Naturel’s advertising conveyed to consumers that the sunscreen was “all natural.”

The Commission (except for Commissioner Ohlhausen, who dissented in part [PDF]) found that the disclaimer was not sufficiently conspicuous to change the overall message that the sunscreen is “all natural.” In particular, the Opinion criticized the disclaimer’s distance from the product’s “all natural” claims, noting that it was “not visible at all without scrolling down” and “well below the website’s ‘Add to Cart’ button so consumers are invited to purchase the product before they would even see the disclaimer.” FTC has previously issued guidance on online disclosures that urged marketers to place disclosures before “order now” or “add to shopping cart” links.

The Commission was also unpersuaded that the website’s disclosure of the product’s dozens of ingredients rendered the marketing “transparent.” The Commission pointed out:

All of the ingredients are in the same font and font size, and nothing on the face of the list identifies dimethicone as a synthetic ingredient. …If the cursor is properly positioned, this webpage identifies dimethicone as a “silicone-based polymer.” [I]t is reasonable for a consumer to rely on express claims, and thus that they should not be required to search for and dig out information that contradicts what an advertisement expressly and prominently conveys. Indeed, we expect consumers to rely on express statements such as the “all natural” representation at issue here, and to interpret such statements as meaning what they say.

The Commission concluded that the “all natural” claim was false and misleading because the product contains 8% of a synthetic ingredient. Further, the Commission rejected California Naturel’s proposed defense that there is no regulatory definition specifying the percentage of natural ingredients required to qualify as “natural,” since the company made the express claim that the product is “all natural.”

The Commission’s Opinion is a significant interpretation of the meaning of “all natural” claims, which are not addressed in FTC’s Green Guides guidance on environmental marketing. Here, the Commission cited court cases for the proposition that an “all natural” claim means that the product contains only ingredients found in nature. The Opinion also suggests that a properly qualified “natural,” or “92% natural” claim might have passed muster.

Supreme Court denial upholds FTC on substantiating claims in advertising.

Green marketers take note: the Federal Trade Commission (FTC) won a recent victory at the Supreme Court on deceptive advertising, which means companies cannot advertise health benefits for their products without sufficient evidence.

On May 2, the Supreme Court denied POM Wonderful’s petition for certiorari, bringing to an end a six-year-long wrangle with the FTC over advertisements that claimed the company’s pomegranate juice was clinically proven as effective in fighting heart disease, prostate cancer, and erectile dysfunction.

The Supreme Court’s denial leaves in place the January 2015 decision [PDF] from the D.C. Circuit Court of Appeals, which upheld the Commission’s decision that POM misled consumers in violation of the FTC Act. Specifically, the D.C. Circuit upheld the Commission’s findings as to (1) establishment and efficacy claims made in POM’s advertising, as well as (2) inadequate substantiation for those claims.

The D.C. Circuit also affirmed the FTC’s cease and desist order [PDF], which requires POM to substantiate any future disease treatment and prevention claims with at least one randomized, well-controlled human trial, while other health benefit claims must be supported by competent and reliable scientific evidence.

In a statement, FTC Chairwoman Edith Ramirez lauded the Supreme Court’s move, saying the conclusion of the case “makes clear that companies like POM making serious health claims about food and nutritional supplement products must have rigorous scientific evidence to back them up.”

FTC enforces on “all natural” claims in personal care products.

Today, the Federal Trade Commission (FTC) announced proposed settlement agreements and consent orders with four companies for falsely marketing shampoos, sunscreen, and skincare products as “all natural” or “100% natural.” A fifth company was issued an administrative complaint for marketing “all natural sunscreen” that contains “a synthetic ingredient,” dimethicone. Other ingredients cited as “synthetic” by the FTC in the proposed consent orders include ethylhexyl glycol, phenoxyethanol, polyethylene, polyquaternium-37, polyquaternium-7, and caprylyl glycol. The complaints against all five companies allege that using such “synthetic” ingredients renders “all natural” claims false or misleading.

In these cases, the FTC’s proposed orders bar the companies from making misrepresentations in marketing a product about the following:

  • Whether the product is all natural or 100% natural;
  • The extent to which the product contains any natural or synthetic ingredient or component;
  • The ingredients or composition of the product; or
  • The environmental or health benefits of the product.

However, representations about these subjects are allowed under the proposed consent orders if the company “possesses and relies upon competent and reliable evidence” or “competent and reliable scientific evidence” that is “sufficient in quality and quantity based on standards generally accepted in the relevant fields when considered in light of the entire body of relevant and reliable evidence, to substantiate that the representation is true.”

Notably, today’s actions are not accompanied by an Enforcement Policy Statement or other guidance for companies not subject to the consent orders. FTC has raised questions in these enforcement actions such as: Which other commonly used ingredients in personal care products are “synthetic”? How does FTC determine whether a substance is “synthetic” or “natural”? Do plant-based versions of caprylyl glycol, for example, count as “synthetic”? Are processes and production considered as part of the “synthetic” vs. “natural” distinction, or just the sources or raw materials of the ingredients?

“All natural” claims are particularly difficult to substantiate because such claims are interpreted by consumers in a variety of different ways, and the various federal agencies that have jurisdiction over such claims in the United States have not provided much clarity. When issuing the revised Green Guides in 2012, for example, the FTC declined to provide guidance on “all natural” claims, citing the lack of data on how consumers interpret such claims. A December 2015 survey [PDF] by Consumer Reports found that misunderstanding about the meaning of “natural” in the food world was widespread; more than 80% of shoppers thought that in the context of processed foods, “natural” meant no pesticides were applied in production, no chemicals were used in processing, and that the food contained no Genetically Modified Organisms (GMOs) or artificial ingredients or colors. Meanwhile, the Food and Drug Administration (FDA) is still collecting public comments, through May 10, 2016, on using the term “natural” in food labeling.

FTC warns users and providers of environmental certification seals.

Earlier this month, the Federal Trade Commission (FTC) sent warning letters to five providers of environmental certification seals and 32 businesses using those seals on their websites. The FTC is concerned that the seals may be deceptive according to Section 5 of the FTC Act, and may not comply with the agency’s environmental marketing guidelines, known as the “Green Guides.” The letters request that the recipients advise on what steps they are taking to bring their marketing into compliance. The agency is not disclosing the names of the companies that received the warning letters.

According to the Green Guides, unqualified general environmental benefit claims and environmental certificates or seals are likely to convey a wide range of meanings to consumers; i.e., consumers may see a picture of a leaf or the word “green” and assume that means the product is made of recycled materials or manufactured with renewable energy, even if those claims are nowhere to be found. Thus, the Guides caution marketers against using unqualified general environmental benefit claims – like “eco-friendly” – or environmental seals that do not convey “the basis for the certification.”

According to the warning letters, the environmental certification logos at issue do not convey the basis for the certification and are not accompanied by “clear and prominent qualifying language that limits the claim to a specific benefit.” Furthermore, the FTC cites their “.com Disclosures” guidance in noting that such a logo on a company’s website is “not likely an effective hyperlink label leading to the necessary disclosures.”

In its Business Blog, the FTC has a post on “Performing seals” which discusses the matter and advises on the following “key principles” about the use of environmental certifications and seals of approval:

  • Without careful qualification, general environmental benefit claims pose a risk of deception. Under the FTC Act, deception can occur inadvertently if the marketer does not have substantiation for consumers’ interpretations of claims. For example, if a product conveys an unqualified “eco-friendly” claim, and a consumer interprets that to mean that the product is carbon neutral and non-toxic, then the product maker may be on the hook for deception unless it has evidence to prove that the product is, in fact, carbon neutral and non-toxic.
  • Certifications and seals that don’t explain the reason for the thumbs-up may convey broad claims that can’t be substantiated. BecGreen Certification Examples - Good and Badause it is unlikely that companies can substantiate the vast array of claims that consumers can potentially interpret from an unqualified environmental certification seal, the FTC urges against using “seals that do not convey the basis for the certification.” The FTC’s blog post also includes a helpful visual illustrating good and bad examples of using an environmental certification seal (at right):
  • Companies can take steps to reduce the risk of deception. As discussed in the Green Guides, visuals like certification logos should be accompanied with “clear and prominent qualifying language that clearly conveys that the certification or seal refers only to specific and limited benefits.” In the “Good Example” of an environmental certification seal, for example, the words “Biodegradable,” “Recyclable,” and “Compostable,” are clearly displayed next to the certification logo.
  • Logos themselves aren’t likely to be effective hyperlinks. Companies should not assume that readers will click on the logo image, and instead include explanatory information in large, easy-to-understand text, right next to the logo. In cases where not all attributes can be listed next to the seal, companies should display sufficient information upfront to explain why readers should click the clear and prominently placed link.
  • Both the certifier and the advertiser have responsibilities under Section 5 of the FTC Act. In its letters to certifiers, the FTC notes that the certifiers’ websites do not appear to provide instructions to marketers on using qualifying language.
  • The FTC has resources for companies that want to keep green claims clean. Here, the FTC refers to the Green Guides as well as its Statement of Basis and Purpose [PDF] for more detail. More resources are available on the FTC’s Environmental Marketing

The FTC has not determined whether the letter recipients’ claims violate the law and is not taking any law enforcement actions at this time.

EPA seeking feedback on new logo for Design for Environment label.

Yesterday, the EPA’s Design for the Environment (DfE) program announced two listening sessions to solicit public input as part of the process of redesigning the new logo for the voluntary product labeling program. Chemical-based products – like cleaning solutions and laundry detergents – bearing the DfE label must meet certain standards that exclude ingredients that have been identified as chemicals of concern. Four proposed design concepts for the new logo are posted online. EPA’s stated goals for the new logo are:

  • Better convey the scientific rigor of EPA’s product evaluation and the benefits to people and the environment with a label that is easier to display on products, materials, and in digital media;
  • Increase buyers’ recognition of products bearing EPA’s Safer Product Label; and
  • Encourage innovation and development of safer chemicals and chemical-based products.

E&E News reports that industry groups are concerned with the logo redesign, quoting American Chemistry Council president Cal Dooley at a conference earlier this year calling the DfE program “unprecedented” in terms of the label’s “potential for significant market implications.” Dooley also expressed doubt that DfE met the Federal Trade Commission’s Green Guides guidelines for private labeling programs.

EPA’s listening sessions will be held as webinars on August 4 and 5, 2014, from 1pm to 2pm Eastern Time; participants must register no later than August 1. Comments are also accepted on the DfE label website. According to the Federal Register announcement, although EPA “does not intend to formally respond to all comments that are submitted, EPA will consider the information gathered from this notice and other sources as it selects a new DfE logo.”

FTC brings enforcement actions for biodegradability claims.

Last week, the Federal Trade Commission (FTC) announced enforcement actions against six companies for misleading and unsubstantiated environmental marketing claims. Five of the enforcement actions concern biodegradability claims for plastics, while the sixth relates to a company’s alleged violation of a consent order prohibiting making green claims for its paper plates and bags. These actions follow FTC’s July settlements with three mattress manufacturers regarding unsupported “VOC-free” claims. Together, these cases demonstrate that the FTC highly prioritizes ensuring compliance with its revised Green Guides, the Commission’s guidelines for how companies should properly make environmental claims, and sheds some light on how FTC interprets some of the Green Guides’ provisions.

This marks the first time the FTC has addressed claims for biodegradable plastic. In the plastics matters, FTC has filed complaints and proposed consent orders against four companies that make various plastic products – ranging from golf tees to shopping bags – and a fifth, ECM Biofilms, which sells plastic additives to product manufacturers, including to two of the other companies targeted by the FTC. In addition to various charges of misrepresentation related to the biodegradability claims, ECM Biofilms is also charged with providing customers and distributors with the means to deceive consumers by issuing its own “Certificates of Biodegradability.” Under the proposed consent orders, the companies face no fines but are barred from making biodegradability claims that are unsupported by competent and reliable scientific evidence.

Notably, the consent orders state that ASTM D5511, a test standard commonly used in the industry, cannot be used to substantiate unqualified biodegradability claims or claims beyond the parameters of the test. FTC appears to believe that ASTM D5511 does not simulate the conditions in landfills or other disposal facilities. The consent orders, like the Green Guides, require that unqualified biodegradability claims must be supported by evidence that the product will completely decompose into elements found in nature within one year after customary disposal. Qualified biodegradability claims must include certain appropriate caveats, such as the time period required for a product to completely decompose in a landfill or other disposal environment near where potential consumers live. The consent agreement packages are subject to public comment through November 29, 2013. According to Plastics News, all of the companies have agreed to the settlements except ECM Biofilms, which maintains that tests show that plastics made with its additives will biodegrade in environments mimicking landfills. FTC has scheduled a hearing before an Administrative Law Judge for ECM Biofilms in June.

In the sixth matter, FTC is seeking a $450,000 civil penalty against AJM Packaging Corporation, a manufacturer of paper products including plates, bags and napkins. The FTC’s complaint charges that AJM violated a 1994 consent order by failing to properly substantiate claims that its products were biodegradable, compostable, and/or recyclable.  The settlement with AJM vacates the prior consent order and enters a new one reflecting the updates to the Green Guides and requiring AJM to disclose certain information needed to qualify certain green claims.