The Federal Trade Commission just settled with retailer Truly Organic over charges that the company falsely advertised that its bath and beauty products are "organic" and "certified organic." As part of the settlement, the company agreed to pay $1.76 million.
According to the allegations in the complaint, Truly Organic sold a variety of personal care products to consumers, including hair care products, body washes, and lotions. Truly Organic then advertised the products on its own website, on its social media channels, and through third party retailers. The company made a variety of claims that its products are organic, including claiming that they are "100% organic," "truly organic," "certified organic," and "USDA certified organic." Some of these claims were made in influencer videos that were posted on Truly Organic's YouTube channel. The FTC alleged, however, that many of Truly Organic's products contained non-organic ingredients or no organic ingredients at all.
The FTC also charged that Truly Organic advertised its products as "vegan," when some of the products contain non-vegan ingredients.
In addition to prohibiting the marketer from making misleading claims in the future about whether its products are "organic" or "vegan," the order covers any claim that the company may make about "environmental or health benefits of any good or service."
What are some important takeaways from this action? If you're going to make "organic" claims about your products, you need to ensure that the product is entirely organic. If you're sourcing "organic" products or ingredients from suppliers, you'll also need to have proper processes in place to verify that those products and ingredients are truly organic. In addition, don't fudge your "certified" claims. If you claim that a product has been "certified," you'd better have a proper, current certification in place
And don't assume that if you've gone too far, you'll just get a slap on the wrist. This case may really be a signal from the FTC that it is changing its approach to enforcement in fraud cases. The nearly $2 million settlement here -- and a serious fencing-in order that covers not only the claims at issue but any claims related to health or the environment -- makes its clear that the FTC is not messing around.
Commissioner Rohit Chopra issued a statement as part of the settlement of this matter, saying that "it reflects a difference in approach compared to other matters inherited over the last year." He said that this settlement "makes it clear that the Commission is committed to consequences for dishonesty and fraud." He also called for the FTC to issue a Policy Statement setting forth the Commission's approach to enforcement in cases involving fraud or dishonesty. He said, "In cases involving such conduct, no-money settlements are inadequate, and the Commission should commit itself to exercising its full authority to protect consumers and honest businesses."
"To know if a product is truly organic, consumers have to rely on companies to be truthful and accurate. 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." -- Andrew Smith, Director, FTC Bureau of Consumer Protection