Last week, the Federal Trade Commission (FTC) announced a $1.76 million settlement with Truly Organic, Inc. and its founder and CEO Maxx Harley Appelman regarding false “organic” claims. This is the first time the FTC has obtained monetary relief for deceptive “organic” claims, and the buzz around this settlement signals it may not be the last. The Commissioners’ vote was unanimous, and Commissioner Rohit Chopra released a statement in support of the settlement calling for the FTC to issue a Policy Statement setting forth the Commission’s approach to enforcement in cases involving dishonesty or fraud.
Truly Organic is a bath and beauty retailer that makes and sells a variety of personal care products, including hair care products, body washes, lotions, baby products, and cleaning products. As the brand name suggests, Truly Organic markets its products as wholly organic or certified organic in compliance with the United States Department of Agriculture’s (USDA’s) National Organic Program (NOP), the program that enforces national standards for organically produced agricultural products. Truly Organic conveyed the organic theme through a variety of claims, including “100% organic,” “truly organic,” “certified organic,” and “USDA certified organic.” The company also claimed its products were “vegan.”
According to the complaint, however, Truly Organic’s products are neither “true” nor “organic.” The FTC contends that none of True Organic’s products have been certified in compliance with USDA’s NOP. Further, many of Truly Organic’s products contained ingredients that were not organic or contained no organic ingredients at all. In some instances, Truly Organic used non-organic ingredients, such as non-organic lemon juice, when it could have sourced an organic version. Other products included ingredients that USDA prohibits in organic products, such as cocamidopropyl betaine and sodium cocosurfactant. A number of products were also marketed as “vegan,” yet they contained non-vegan ingredients like honey and lactose.
In addition to the $1.76 million settlement, the Order also prohibits Truly Organic and Appelman from making misleading claims in the future about whether its products are “organic” or “vegan.” Notably, the Order also covers any claims regarding the “environmental or health benefits” of any Truly Organic product. These fencing-in provisions indicate that the Commission recognizes that misleading environmental and product-attribute claims cause harm to consumers and industry alike.
The Commission’s unanimous vote approving the settlement shows that all five Commissioners support stepping up enforcement against deceptive organic claims. Commissioner Rohit Chopra’s separate statement praised the Truly Organic settlement for “reflect[ing] a difference in approach compared to other matters inherited over the last year,” where cases regarding fraudulent claims “were resolved for no money, no notice to victims or competitors, and no findings or admissions of liability.” Commissioner Chopra stressed that “[i]n 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.”
Consumers are willing to pay more for organic products. Companies marketing “organic” and other product-attribute claims should take note: The FTC is serious about deceptive claims in this space and is likely to take further action in the near future.