Council of Better Business Bureaus’ National Advertising Division Recommends Kauai Coffee to Modify and Discontinue Environmental-Benefits Claims for Coffee Pods

The National Advertising Division (NAD), of the Council of Better Business Bureaus, recommended that Kauai Coffee Company, LLC, discontinue certain environmental-benefits claims for the company’s single-serve coffee pods. In addition, NAD found that the company’s webpage fails to meet FTC Green Guide requirements for advertising claims. The NAD decision recommends that Kauai Coffee company discontinue and modify several advertising claims. It also requested that the company provide substantiation for a number of express claims.

NAD’s purpose is to provide efficient, cost-effective resolution to disputes between private parties regarding national advertisements. The process is voluntary. This type of voluntary enforcement allows the NAD to use alternative dispute resolution to address and settle disputes within 60 to 90 days. Advertisements challenged under the NAD are subjected to the “claim substantiation” standard promulgated by the Federal Trade Commission (FTC). Companies can appeal the NAD decisions to the National Advertising Review Board, which appoints appellate panels to review decisions issued by the NAD. NAD reserves the right to refer the claims to the appropriate federal agency, usually the FTC, for further action. It is this threat of a potential FTC investigation that incentivizes those to participate in the voluntary NAD process.

Much of the Kauai Coffee NAD decision addresses claims regarding the compostability of the Kauai coffee pods. Although the company obtained third party certification that the pods meet the requirements of ASTM standards D6400 and D6868, the certification does not extend to typical disposal methods. Indeed, the pods will disintegrate and biodegrade swiftly and safely only in a professionally managed industrial composting facility, which is not readily available to most consumers, and the pods are not suitable for home compositing. NAD found that Kauai Coffee must prominently discloses these facts.

According to NAD, the Kauai Coffee webpage violated the FTC Green Guides requirements by not clearly and prominently disclosing both that the pods are not suitable for home composting and that industrial composting programs are not readily available to most consumers. Indeed, NAD noted, “it is well-established that any material disclosures must be clear and conspicuous and appear in close proximity to the claim it is qualifying.”

In addition, NAD has asked the company to substantiate a number of its environmental-benefits claims including:

• “Don’t trash the Earth with your coffee. Brew & Renew.”

• Kauai Coffee comes in “new certified 100% compostable pods that work in all K-Cup brewers.”

• “Compostable in industrial facilities. Check locally, as these do not exist in many communities. Not certified for backyard composting.”

• “Now you can enjoy the great taste and convenience of single-serve coffee without worrying about the environmental impact. Our certified 100% compostable pod is compatible with all K-cup brewers and is designed to go back to the land – not the landfill.”

NAD has also asked that Kauai Coffee discontinue use of the following statements:

• “Don’t trash the Earth with your coffee. BREW & RENEW” along with the image of the trash can imprinted with a green/blue image of the earth.

• “Now you can enjoy the great taste and convenience of single-serve coffee without worrying about the environmental impact. Our certified 100% compostable pod is compatible with all K-cup brewers and is designed to go back to the land – not the landfill.”

NAD reports that Kauai Coffee will comply with NAD’s recommendations.

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.

Ninth Circuit rules on “all natural” food claims.

Last week, the Court of Appeals for the Ninth Circuit reversed in part and affirmed in part orders issued by a district court judge in a putative class action case involving “all natural” claims made by Dole Foods. In Brazil v. Dole, No. 14-17480 (9th Cir. Sept. 30, 2016), the plaintiff, Chad Brazil, alleged that Dole’s “All Natural Fruit” labels for packaged fruit products were deceptive under the California Unfair Competition Law (UCL), California False Advertising Law (FAL), and California Consumer Legal Remedies Law (CLRA).

The plaintiff claimed that the labels were deceptive because the products contain synthetic citric and ascorbic acid, citing evidence including informal policy issued in 1993 by the federal Food and Drug Administration (FDA), as well as more recent FDA warning letters to food sellers making similar claims (“100% Natural” or “All Natural”). The FDA’s informal policy [PDF] states that a “natural” claim on a food label is truthful and non-misleading when “nothing artificial or synthetic… has been included in, or added to, a food that would not normally be expected in the food.” In the warning letters, FDA described “natural” claims as deceptive because the food products included synthetic citrus acid, among other substances.

Upon appeal, the Ninth Circuit affirmed the lower court’s order decertifying the class because the plaintiff failed to show how to calculate the price premium with proof common to the class. The Court also affirmed the dismissal of the plaintiff’s claims for the sale of “illegal products.”

However, the Ninth Circuit reversed the district court’s granting of summary judgment on the merits of Brazil’s claims. The Court held that the evidence presented “could allow a trier of fact to conclude that Dole’s description… is misleading to a reasonable consumer.” Interestingly, the Court noted that the FDA warning letters “did not always rely on the limitation that an artificial or synthetic product would ‘not normally be expected to be in the food’ – and, in fact, asserted that foods that naturally contain citric acid (such as tomatoes) may not be labeled ‘all natural’ if synthetic citric acid is added to them.”

While unpublished, the Ninth Circuit’s opinion [PDF] may prove consequential because it suggests how the Court may interpret “natural” claims in the future. In addition, a number of other cases involving “natural” claims have been stayed while this case has been pending and the plaintiff’s bar may be emboldened to pursue further litigation.

The case has been remanded to the lower court to allow the plaintiff “injunctive relief on behalf of the class and his remaining individual claim for restitution.”

Seventh Generation Settles “Natural” Claims Class Action For $4.5M

Consumers in this class action claimed that Seventh Generation Inc. deceptively labeled its cleaning products as “natural” even though they contained synthetic preservatives. Seventh Generation has agreed to pay $4.5 million to settle this case in New York federal court.

Seventh Generation makes several household cleaning items such as laundry detergent, glass cleaner, and dish soap. The products in question are natural laundry detergent, natural 4X concentrated laundry detergent, ultra power plus natural laundry detergent, natural dish liquid, and ultra power plus natural dish liquid. They were available for sale in stores such as Walgreens, Walmart, Target, Amazon.com, Bed Bath & Beyond, and Whole Foods.

The consumers alleged that the company incorrectly used the term “natural,” despite the fact that two of the ingredients — Methylisothiazolinone (“MIT”) or Benzisothiazolinone (“BIT”) — are synthetic. MIT and BIT are antimicrobial preservatives.

In its press release, Seventh Generation stood by its “natural” labeling, but cited burdensome litigation costs as its reason for settlement. Under the terms of the settlement, Seventh Generation will remove the “All Natural” and “100% Natural” claims, and will add clarifications about the non-toxic and hypoallergenic claims. Additionally, Seventh Generation will provide compensation to eligible claimants.

This lawsuit is one of several settled and pending cases against companies claiming that their products are natural, but contain synthetic substances. See Earth Friendly Settlement and Tom’s of Main Settlement.

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.”

EPA seeks input on ecolabels for paints, flooring, and furniture.

As part of its pilot project to test its “Draft Guidelines for Product Environmental Performance Standards and Ecolabels for Voluntary Use in Federal Procurement,” the Environmental Protection Agency (EPA) is seeking input on private sector environmental performance standards and ecolabels applicable to paints/coatings, flooring, and furniture. According to the Information Collection Request (ICR) submitted to the Office of Management and Budget (OMB), the Agency is expecting responses from standards development organizations, ecolabel programs, and certification entities with environmental performance standards for products. EPA is also asking these entities to participate in self-assessments, using checklists specific to each product category and based on the draft Guidelines, as well as in follow-up interviews with an independent assessor. The ICR was announced in a Federal Register notice published on Monday; public comments on the ICR must be received by May 25, 2016.

EPA developed the draft Guidelines in 2013 to help federal purchasers select appropriate private sector ecolabels and standards for environmentally preferable purchasing. In the ICR, EPA states: “While Federal purchasing policy is clear for the several standards and ecolabels that are listed in statute, regulation, or Executive Order, the lack of independently assessed information about and federal guidance on using other product environmental performance standards and ecolabels often results in an inconsistent approach by Federal purchasers and confusion and uncertainty for vendors and manufacturers.” With this ICR, EPA seeks to address this problem by testing an approach to determine which standards and ecolabels to support “in a fair, transparent, and consistent manner.” Ecolabels and standards will be assessed based on the criteria used in developing and managing the standards and ecolabels as well as “the effectiveness of the standards in ecolabels in protecting environmental and human health.”

EPA is contracting with two companies, Resolve and Industrial Economics, to conduct the pilot project to further refine the draft Guidelines and test how to assess standards and ecolabels. Resolve will “convene a coordinating Governance Committee, product category-specific multi-stakeholder panels,” while Industrial Economics will “develop and pilot test an approach” to assess standards and ecolabels in paints/coatings, flooring, and furniture.

Along with the ICR itself, the pilot project’s survey and assessment criteria are also available in the ICR’s docket (EPA-HQ-OPPT-2014-0838) on Regulations.gov.

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.

FDA seeks input on “natural” food labels.

Last week, the U.S. Food and Drug Administration (FDA) announced that it is seeking comments and information on the use of the term “natural” in food labeling. The move is in response to three citizen petitions, from industry stakeholders, requesting that the agency define “natural” for food labeling and one citizen petition, from Consumers Union, asking for a prohibition on the term. The FDA also stated that it is working with the U.S. Department of Agriculture (USDA) to examine “natural” labeling for meat, poultry, and egg products.

The last time the FDA considered establishing a definition for “natural” in food labeling was 1991, when it published a proposed rule on labeling and sought comment on whether the agency “should establish a meaningful definition for ‘natural’ so that this term would have a common consumer understanding, and whether it should prohibit ‘natural’ claims entirely on the grounds that they are false or misleading.” FDA declined to define “natural” by rulemaking in 1993, but has continued to maintain its policy that labeling a food as “natural” means that “nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in that food.” Critically, the FDA’s policy does not address methods of food production (like genetic engineering or pesticide use) or processing and manufacturing (like pasteurization), nor whether “natural” describes any nutritional or health benefit.

The three petitions to the FDA regarding “natural” labeling all seek guidance on whether “natural” can apply to certain methods of food production, processing, and manufacturing. Two of the petitioners requested better harmonization with the USDA’s Food Safety Inspection Service standards. The Consumers Union petition, seeking a prohibition on “natural” food labeling, argues that “natural” is “vague and misleading,” citing a Consumer Reports National Research Center survey. That survey “suggests that nearly two-thirds of U.S. consumers are currently misled by use of the term ‘natural’ on certain food labels and nearly 90 percent expect it to ‘mean much more than it does.’”

The FDA has posed several specific questions to commenters on when “natural” labeling is misleading to consumers, including input on application to food production, processing, and manufacturing practices, as well as a request for consumer perception data on confusion with terms like “healthy” and “organic.” The agency is accepting comments through February 10, 2016, via docket number FDA-2014-N-1207.

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.

New chemical footprint tool released.

Clean Production Action, an environmental nonprofit, and the Lowell Center for Sustainable Production at the University of Massachusetts Lowell yesterday announced the launch of a new tool for companies and investment firms to measure suppliers’ use of safer chemicals and evaluate their own progress towards sustainability. The Chemical Footprint Project (CFP) is a third-party benchmark facilitating the comparison of corporate chemical use practices, conceptually similar to carbon footprint metrics.

The CFP defines “chemical footprint” as “the total mass of chemicals of high concern (CoHCs) in products sold by a company and used in its manufacturing operations.” The CFP identifies chemicals of high concern as all chemicals on California’s Safer Consumer Products list of Candidate Chemicals.

The CFP’s Steering Committee and Technical Committee members are drawn from several major corporate and nonprofit stakeholders, including Target, Staples, Kaiser Permanente, Hewlett-Packard, Seagate Technology, ChemSec, Environmental Defense Fund, and the U.S. Green Building Council.

According to the Project’s press release, the CFP is “the first initiative to publicly measure overall corporate chemicals management performance by evaluating:

  • Management Strategy
  • Chemical Inventory
  • Progress Measurement
  • Public Disclosure.”

The Project is expected to be fully operational in early 2015. The CFP is only the latest initiative to measure and manage the environmental and health impacts of products based on chemicals in supply chains. In October, the World Business Council for Sustainable Development released a guidance document on life cycle assessment (LCA) methods for chemical products. Last year, retailers Target and Walmart both announced sustainable chemical products programs which were both based on private standards.