Truly Organic? The FTC Says No, Alleges Retailer Misled Consumers about Its Products

Broadly speaking, claim substantiation is a requirement that advertisers have a reasonable basis for their claims before they are made. The FTC recently announced that a Miami Beach-based retailer and its founder will pay $1.76 million to settle a Federal Trade Commission complaint alleging that their nationally marketed bath and beauty products are not “100% organic” and not “certified organic” by the U.S. Department of Agriculture (USDA).

According to the FTC, the company also advertises products as vegan, even though certain products allegedly contain non-vegan ingredients. A court order resolving the complaint bars defendants from making similar deceptive advertising claims.

“To know if a product is truly organic, consumers have to rely on companies to be truthful and accurate,” said Andrew Smith, the Director of the FTC’s Bureau of Consumer Protection. “That’s why we’ll hold companies accountable when they lie about their products being organic, especially when they’ve used fake certificates and ignored USDA warnings.” An experienced FTC defense attorney can assist digital marketers with determining which claims require substantiation, and understand the FTC’s criteria for substantiation.

According to the complaint since at least 2015, the defendants have advertised, labeled, offered for sale, and sold a range of personal care products to consumers, including haircare products, body washes, lotions, baby products, personal lubricants, and cleaning sprays.

The products fall into two basic categories, according to the Commission. First, those that Truly Organic “makes” by buying wholesale bath and beauty products and adding ingredients designed to increase their visual appeal. Second, “bath bombs” and soaps that they buy as finished products from online wholesalers and resell at a substantial markup.

The FTC alleges that the company sells products nationwide using its own website and social media accounts. According to the complaint, the company also sells through third-party websites and provides third parties with marketing materials used to market and sell products.

The complaint alleges that to induce customers to purchase products, defendants have used many statements that imply their products either are wholly organic or certified organic in compliance with the USDA’s National Organic Program. These statements allegedly include claims that products contain “100% Organic Ingredients,” are “certified organic,” are “USDA . . . organic,” are “100% organic,” or are “Truly Organic.”

The FTC alleges that many of the products actually contain ingredients that are not organic, with the non-organic ingredients included only in lists that are buried among other text on product labels and websites. Further, as alleged by the Commission, the products incorporate non-organic ingredients that could be organically sourced, such as non-organic lemon juice. Other products are alleged to contain non-organic ingredients that the USDA does not even allow in organic handling.

Additionally, according to the complaint, some products contain no organic ingredients at all, as they come as finished products from wholesalers who do not offer organic products. The complaint alleges that none of the defendants’ products have been certified organic in compliance with the USDA NOP, and some products marketed as vegan contain non-vegan ingredients.

Finally, the FTC alleges that the defendants continued to supply marketers and internet influencers with product labels featuring the false certifications after resolving a 2016 USDA investigation, and, through 2018, continued to endorse and upload influencer videos to a company YouTube channel containing “certified organic,” “USDA organic,” and “vegan” claims. During this time, the complaint alleges that the defendants regularly bought hundreds of gallons of bath, beauty, and home products they knew did not contain 100 percent organic ingredients, added ingredients to increase their visual appeal, repackaged them, and deceptively sold them to consumers as organic.

The court order settling the FTC’s allegations, without limitation, prohibits the defendants from making deceptive claims, including false and/or unsubstantiated claims, that any good or service: is wholly or partially organic; contains or uses organic ingredients; is certified organic; is vegan; or has been evaluated by any third party, including one affiliated with the USDA NOP, based on its environmental or health benefits or attributes.

It also bars the defendants from making any representation about the environmental or health benefits of any good or service, unless it is non-misleading, true at the time it is made, and is supported by competent and reliable scientific evidence.

The order prohibits the defendants, in connection with the sale of any good or service, from providing anyone else with the means and instrumentalities that would enable them to make any representation prohibited by the order. It also imposes a $1.76 million judgment against the defendants.

Commissioner Rohit Chopra issued a separate statement commending Commission staff for investigating what he referred to as “fraudulent greenwashing” by the defendants. “This conduct distorted competition for organic products, inflicting harm on honest producers,” Chopra stated.

Consult with an FTC defense attorney about the basics of FTC claim substantiation. The Federal Trade Commission requires advertisers to provide a reasonable basis for advertising and marketing claims. It is vital for those that market and sell consumer products in the U.S. to understand the process of claim substantiation, including how to test claims and use disclosures to qualify claims.

Richard B. Newman is an FTC defense attorney at Hinch Newman LLP. Follow him on LinkedIn @FTC Defense Attorney.

Information conveyed herein is for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information contained herein without seeking the advice of an attorney. Attorney advertising.