By way of a federal court order that became final last month, Truly Organic Inc. and its founder will pay $1.76 million to settle a Federal Trade Commission greenwashing complaint alleging that their nationally marketed bath and beauty products are neither “certified organic” nor “vegan” as falsely claimed.
According to the FTC’s complaint, in this era when many consumer purchases are influenced by environmental claims, since at least 2015, the defendants 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 categories: First, those that Truly Organic “makes” by buying wholesale bath and beauty products and adding ingredients designed to increase their visual appeal; and second, bath bombs and soaps that they “buy as finished products” from online wholesalers and resell at a substantial markup.
Truly Organic sold products nationwide using its own website and voracious social media accounts. The company also sold through third-party websites, including prominent retailers like urbanoutfitters.com, nordstrom.com, and aerie.com, providing third parties with marketing materials used to market and sell Truly Organic products.
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts or practices in or affecting commerce.”
The complaint alleged that to induce customers to buy Truly Organic products, the defendants used a variety of fraudulent statements that implied their products either are wholly organic or certified organic in compliance with the USDA’s National Organic Program. These deceptive statements included claims that Truly Organic products contain “100% Organic Ingredients,” are “certified organic,” are “USDA . . . organic,” are “100% organic,” or are “Truly Organic.”
The FTC contended, however, that the defendants’ 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, this is not about organic calamansi juice being “in” and organic celery juice being “out” but that some Truly Organic products incorporated non-organic ingredients that could have been organically sourced, including non-organic lemon juice.
Other Truly Organic products contain non-organic ingredients that the USDA does not even allow in organic handling, such as the chemicals cocamindopropyl betaine and sodium cocosurfactant.
In addition, according to the complaint, some Truly Organic products, such as their bath bombs and soaps, contain no organic ingredients at all, as they come as finished products from wholesalers who do not offer organic products. The complaint alleged that none of the defendants’ products have been certified organic in compliance with the USDA. Truly Organic also falsely advertised products as vegan, even though certain products contain non-vegan ingredients like honey and lactose.
Marketers don’t get to greenwash.
And outrageously, the defendants also admitted they continued to supply marketers and internet influencers with product labels featuring the false certifications for months after resolving a 2016 USDA investigation, and, through 2018, continued to endorse and upload influencer videos to Truly Organic’s YouTube channel containing “certified organic,” “USDA organic,” and “vegan” claims. During this time, the complaint alleged 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 charges contains both conduct and monetary provisions. First, the order prohibits Truly Organic and Maxx Harley Appelman (.. it is significant the FTC also pursued a claim against the principal of the company) from making deceptive claims, including false or unsubstantiated claims, that any good or service: (1) is wholly or partially organic; (2) contains or uses organic ingredients; (3) is certified organic; (4) is vegan; or (5) has been evaluated by any third party, including one affiliated with the USDA organic program, based on its environmental or health benefits or attributes.
Second, the order 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.
Third, 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.
Finally, the order imposes a $1.76 million judgment against the defendants. The FTC filed the proposed order in the U.S. District Court for the Southern District of Florida, and it has now been entered by the court.
“To know if a product is ‘truly’ organic, consumers have to rely on companies to be truthful and accurate,” according to 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.”