Duane Morris LLP – Cosmetics Companies Invite Legal Risks With ‘Clean’ Marketing
Cosmetics

Duane Morris LLP – Cosmetics Companies Invite Legal Risks With ‘Clean’ Marketing

The market for clean beauty is expected to reach an estimated $11.6 billion by 2027.[1] But the definition of “clean” is anyone’s guess — and leaves the industry ripe for class action litigation.

As brands turn their attention to Gen Z consumers, authenticity and sustainability are crucial to attracting younger consumers. But promoting products and, indeed, a brand’s ethos as “clean” can carry not only reputational risks, but legal and regulatory risks too.

Defining Clean Beauty

The notion of clean beauty first emerged in the 1970s with fresh-faced, no-makeup marketing.[2] But the term evolved with the growth of independent skin care brands that favored natural and naturally derived ingredients over synthetics, and abstained from ingredients linked to health or environmental issues.[3]

Today, “clean” means products formulated without ingredients like sulfates, parabens or formaldehydes. But without any legal definition of “clean,” brands have adopted different criteria based on lists of prohibited ingredients and sustainability commitments.[4]

Furthermore, brands have capitalized on demand for clean products by adopting descriptors like “natural,” “conscious,” “green” and “organic.”

The Existing Legal Framework

In the U.S., the laws regulating cosmetics have not substantially changed since the Federal Food, Drug and Cosmetic Act, passed in 1938.[5] The FDCA defines cosmetics as “articles intended to be rubbed, poured, sprinkled or sprayed on, introduced into or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness or altering the appearance.”[6]

This definition encompasses products as diverse as moisturizers, eye and facial makeup, shampoos and deodorants.[7] Cosmetics typically do not require premarket approval. But once they enter interstate commerce, they must be safe for use according to product labeling or custom, and not misbranded or adulterated.[8]

The U.S. Food and Drug Administration does not have a list of accepted claims for cosmetics. However, there are limits to what brands can say on their labels.

The Fair Packaging and Labeling Act requires that cosmetic labeling must be truthful and not misleading, and disclose all ingredients.[9] Products that fail to comply with the FPLA are considered misbranded under the FDCA, and can result in enforcement action by the FDA.

The Federal Trade Commission, which regulates cosmetic advertising under the FTC Act, can also take action against brands to enjoin what it perceives as unfair or deceptive practices, or false advertisements that are likely to mislead a reasonable consumer and material to their purchasing decisions.[10]

Legal Risks Associated With Promoting Clean Beauty

Neither the FDA nor the FTC has defined the term “clean” for use in cosmetic labeling. Nevertheless, companies have faced scrutiny for allegedly deceptive claims with respect to cosmetics marketed as “natural” or “organic.”

In 2016, the FTC prohibited four companies from making deceptive claims with respect to cosmetics marketed as “all natural” or “100% natural” when those products contained synthetic ingredients.[11] As recently as 2019, the FTC required a company to pay $1.76 million over charges that it deceptively marketed its products as “vegan,” “100% organic,” and “certified organic” when the products contained nonvegan and nonorganic ingredients, and were not certified organic by the U.S. Department of Agriculture.[12]

Significantly, the FTC noted that the company supplied influencers with labels featuring false certifications, and endorsed or uploaded influencer videos featuring false claims to its YouTube channel.[13] In settling the charges, the FTC forbade the company from providing any third parties, including influencers, with the means to make prohibited claims.[14]

Given the breadth of the cosmetics industry compared to the limited enforcement capacity of regulators, much of the scrutiny regarding clean claims has come from the plaintiffs bar.

Plaintiffs typically allege that a product’s “clean” or “natural” labeling is false and misleading because of the presence of synthetic ingredients. Moreover, this labeling is said to have induced plaintiffs to purchase products they would not have otherwise purchased, at a price point they would not have otherwise paid — a so-called price premium.[15]

These claims are typically brought as class actions pursuant to state consumer protection statutes, particularly New York’s Deceptive Acts or Practices and False Advertising laws, and California statutes like the Consumer Legal Remedies Act, the False Advertising Law and the Unfair Competition Law. Plaintiffs also plead common law claims for breach of implied warranty, unfair or deceptive advertising, negligent misrepresentation, unjust enrichment, and fraud.[16]

Several of these complaints have settled for between $2 million to $7 million, with commitments to clarify language regarding the presence of synthetic ingredients. But where they have progressed, they raise issues as to whether “clean” or “natural” claims would mislead a reasonable consumer — and what, if any, additional steps consumers would be required to take to determine the presence of synthetic ingredients.

These claims also raise issues as to Article III standing to sue in federal court, following the U.S. Supreme Court‘s 2021 decision in TransUnion LLC v. Ramirez, in which putative class members must show that they personally suffered a “concrete injury in fact” as a result of a defendant’s statutory violations — not merely a statutory violation or a nonimminent risk of future harm.[17]

Much of the recent litigation has concerned products containing per- and polyfluoroalkyl substances. PFAS are a widely used class of compounds that is often inadvertently present in consumer goods because of their use in manufacturing processes or presence in water supplies.

But in the case of certain cosmetics, PFAS sometimes added to make products more spreadable and longer-lasting.[18] Plaintiffs have alleged that products purportedly containing PFAS are mislabeled as “clean” or “natural” — and that brands’ failure to disclose the presence of PFAS in products, however inadvertent, resulted in economic injury to consumers who allegedly paid a “price premium” for natural products.

Changing Regulatory Landscape

Although there is a lack of federal guidance surrounding what “clean” means for cosmetics, this ambiguity could change quickly.

In 2021, the FTC indicated that it would initiate a review of its Guides for the Use of Environmental Marketing Claims — the so-called Green Guides — and potentially revisit guidance with respect to claims regarding “non-toxic” and “organic” products.[19]

In the meantime, on July 7, a Senate committee voted to pass the Modernization of Cosmetics Regulation Act, as part of the FDA Safety and Landmark Advancements Act. While more modest than earlier proposals that would have mandated the disclosure of — or in some cases, prohibited — certain ingredients like PFAS,[20] the act would require the FDA to prepare a report on the use and safety of PFAS in cosmetics.[21]

By contrast, states have moved aggressively to regulate ingredient labeling. In September 2020, the Florida attorney general enjoined a hair care company from misrepresenting that its products did not contain certain ingredients, and were “clean,” “naturally-based,” “100% vegan” and “sulfate-free,” in violation of the Florida Unfair Trade Practices Act.

In January 2021, the New York State Senate introduced the proposed Safe Personal Care and Cosmetics Act, which would require cosmetic manufacturers to fully disclose information about certain ingredients identified as “chemicals of concern.”[22]

Additionally, at least four states — California, Maryland, Maine and Colorado — have banned the sale of products that contain intentionally added PFAS, with an additional 32 states considering legislation restricting PFAS, including for use in cosmetics.[23]

Conclusion

Brands should be aware of the potential for liability for promoting products containing certain ingredients as “clean,” “natural” or “chemical-free.”

While the risk of regulatory enforcement is comparatively low, the FTC will scrutinize “all or nothing” claims (e.g., “100% natural”) or easily verifiable claims (e.g., “certified” organic or vegan). Meanwhile, the risk for private and costly litigation is high, as plaintiffs pursue copycat claims on a classwide basis.

Language and context matter. Wherever possible, brands should:

Make sure labeling claims will pass regulatory muster, especially with respect to ingredients that are likely to draw scrutiny.

Obtain third-party certification for allegedly vegan or organic ingredients, and refer to that certification in marketing and labeling.

Ensure consistency of claims and language with marketers and influencers to ensure any product claims are truthful, not misleading, and adequately substantiated.

Consider what is being communicated to consumers, and how it is being communicated — and the value added by “clean” terminology.[24]

Notes

[1] Establishing authority in the clean beauty industry (glossy.co).

[2] Dina ElBoghdady, ‘Clean’ beauty has taken over the cosmetics industry, but that’s about all anyone agrees on, The Washington Post (March 11, 2020), https://www.washingtonpost.com/lifestyle/wellness/clean-beauty-has-taken-over-the-cosmetics-industry-but-thats-about-all-anyone-agrees-on/2020/03/09/2ecfe10e-59b3-11ea-ab68-101ecfec2532_story.html

[3] Paige Stables, Coming Clean: A Clean Beauty Revolution, Allure (Feb. 16, 2021), https://www.allure.com/story/history-of-clean-beauty.

[4] Compare Clean Beauty Collective, “Ingredients We Say No To” (https://www.cleanbeauty.com/pages/no-to-list), with Credo, “The Dirty List” (https://credobeauty.com/pages/the-dirty-list-1), Bluemercury, “The No List” (https://bluemercury.com/pages/conscious-beauty), Sephora, “Clean + Planet Positive” (https://www.sephora.com/beauty/eco-friendly-beauty?icid2=homepage_soft-link_guidedselling_planetpositivecleanplus_us_rwd_070122), and Goop, “Clean Beauty — and Why It Matters” (https://goop.com/beauty/personal-care/clean-beauty-and-why-its-important/) (identifying formaldehyde donors, BHT/BHA, cyclotetrasiloxanes, benzophenone-3, parabens, hydroquinone, triclosan, polyacrylamides, ethanolamines and PFAS, among others).

[5] 21 U.S.C. 301 et seq.

[6] FDCA, 21 U.S.C. § 321(i) (2010).

[7] U.S. Food and Drug Administration (FDA), FDA authority over cosmetics: How cosmetics are not FDA approved, but are FDA regulated. What kinds of products are “cosmetics” under the law?, https://www.fda.gov/Cosmetics/GuidanceRegulation/LawsRegulations/ucm074162.htm#What_kinds. For purposes of this article, the terms “cosmetics” and “personal care products” will be used interchangeably.

[8] 21 U.S.C. §§ 361-362.

[9] See 21 C.F.R. § 701.3.

[10] 15 U.S.C. 1456(a) et seq.

[11] See FTC Press Release, FTC Approves Four Final Orders Barring Companies from Making False All-Natural Claims (July 13, 2016), https://www.ftc.gov/news-events/news/press-releases/2016/04/four-companies-agree-stop-falsely-promoting-their-personal-care-products-allnatural-or-100-natural.

[12] See Stipulated Order for Permanent Injunction and Monetary Judgment; Order Closing Case, FTC v. Truly Organic Inc. and others, No. 1:19-cv-23832-RNS (S.D. Fla. Sept. 18, 2019), available at https://www.ftc.gov/system/files/documents/cases/truly_organic_stipulated_final_order_0.pdf.

[13] See Complaint for Permanent Injunction and Other Equitable Relief, FTC v. Truly Organic Inc. and others, No. 1:19-cv-23832-RNS (S.D. Fla. Sept. 13, 2019), available at https://www.ftc.gov/system/files/documents/cases/truly_organic_complaint.pdf.

[14] Truly Organics Stipulated Order, supra n. 20 at 3.

[15] See, e.g., Onaka et al. v. Shiseido Americas Corporation, Case No. 1:21-cv-10665 (S.D.N.Y. Compl. filed Dec. 20, 2021) (alleging that makeup line advertised as clean, conscious and free of chemicals contained PFAS); McGinty v. Procter & Gamble Co., 4:20-cv-08164 (N.D. Cal. Compl. filed Aug. 31, 2021) (alleging manufacturer mislabeled certain shampoos as ‘NATURE’ or ‘natural’ despite the presence of artificial ingredients); Anne de Lacour et al. v. Colgate-Palmolive Co. et al., No.1:16-cv-08364 (S.D.N.Y. Compl. filed Oct. 27, 2016) (alleging violations of state consumer protection laws involving deodorants and/or toothpastes promoted as “natural” on the packaging).

[16] Id.

[17] Compare Anne de Lacour et al. v. Colgate-Palmolive Co. et al., No.1:16-cv-08364 (S.D.N.Y. Apr. 21, 2021) (granting class certification to consumers who purchased deodorant and/or toothpaste based on a purported “natural” statement on the packaging where Rule 23(a)’s commonality prerequisite and Rule 23(b)’s predominance requirement were met as to the consumer protection claims) with Brazil v. Dole Packaged Foods LLC , No. 14-17480 (9th Cir. Sept. 30, 2016) (decertifying consumer classes where plaintiffs could not provide evidence of an alleged “price premium” to support a class-wide damages model, and where individualized questions of whether class members suffered any actual injury predominated common questions).

[18] See, e.g., Daniela Gruen v. The Clorox Company et al., No. 3:22-cv-00935 (N.D. Cal. Compl. filed Feb. 18, 2022) (alleging that makeup line characterized as “consciously crafted with ingredients from nature” and formulated without “chemicals of concern” contained PFAS); and Onaka et al. v. Shiseido Americas Corporation, Case No. 1:21-cv-10665 (S.D.N.Y. Compl. filed Dec. 20, 2021).

[19] Megan Graham, What Brands Should Know as FTC Prepares to Update Green Marketing Guidelines, Wall St. J. (Aug. 9, 2022), https://www.wsj.com/articles/what-brands-should-know-as-ftc-prepares-to-update-green-marketing-guidelines-11660042800.

[20] These include the Personal Care Products Safety Act (S.2100, introduced June 2021), which would require companies to register with the FDA and disclose the ingredients they use; the No PFAS in Cosmetics Act (H.R.3990, introduced June 2021), which would direct the FDA to issue a rule banning the intentional addition of PFAS in cosmetics; and the Natural Cosmetics Act (H.R.5872, introduced November 2019), which would require the FDA to create definitions for “natural” and “naturally derived products.”

[21] See S.4348, Sec. 806 at https://www.congress.gov/bill/117th-congress/senate-bill/4348/text#toc-id892EB13582A94F5DAD4DA611C1E88DC4.

[22] https://legislation.nysenate.gov/pdf/bills/2021/S3331B.

[23] https://www.saferstates.org/bill-tracker/.

[24] See Ryma Chikhoune, Is Clean Beauty Still Relevant, WWD (July 12, 2022), https://wwd.com/beauty-industry-news/beauty-features/is-clean-beauty-relevant-1234879664/.

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