On April 12, 2016, the Federal Trade Commission (FTC) announced agreements with four cosmetics companies to settle charges by the FTC that the companies falsely advertised their products as “all natural” or “100% natural” even though their products contained synthetic ingredients. The FTC also issued a complaint against a fifth company. If you have attended one of my presentations, it is likely you have heard me speak extensively on this subject and FTC’s announcement last week would have come as no surprise. The FTC’s challenges to the companies’ claims is similar to those currently being fought out in numerous class action lawsuits against food, beverage, and cosmetic companies. But, the FTC’s enforcement is not so much about simply “natural” claims…instead, it’s more about the “all” and “100%” portion of the claims.
In handling one such inquiry from the FTC for a client late this year, I asked the FTC agent whether the FTC was attempting to enforce a “natural” standard even though no such standard had yet been developed by any other federal or state agency. The response was that it was not about trying to set a standard. Indeed, FTC was not challenging manufacturing processes and was not attempting to define “natural.” Instead, I was told the FTC was merely looking at whether the “all” or “100%” portion of the claims were truthful. According to the FTC agent I spoke with, if “all” or “100%” was used to describe the natural-ness of a product, but the product contains ingredients that, in the opinion of their staff organic chemist, are actually synthetically produced, then the product cannot possibly meet the “all” or “100%” natural claim.
Take away…where claims establish a threshold or floor, e.g., “100%,” “all,” “50%,” 90%”, “0” etc., the company is expected to have substantiation that the threshold or floor is met, i.e., truthful. Notably, even though the FTC has provided no guidance on natural claims, its actions here are consistent with the comments provided in its “Green Guides“. Specifically, as to “natural” claims, marketers must have substantiation for the claims they make, including implied claims.