In today's highly competitive personal care and beauty market, the push to appeal to eco-conscious consumers is stronger than ever. Brands are increasingly turning to green marketing claims to differentiate their products and align with the growing demand for sustainability.
However, the allure of these claims comes with significant risks. As recent high-profile lawsuits and regulatory actions have shown, making inaccurate or misleading environmental claims can lead to costly legal battles, damage to brand reputation, and a loss of consumer trust.
In this two-part series, we explore the complex landscape of green marketing in the cosmetics and personal care industry. Part one delves into the potential pitfalls and legal challenges associated with common marketing claims, such as "recyclable," "Made in USA," and "all-natural."
With insights from Mollie Hughes, CEO of Softly Solutions, we examine real-world examples where brands have faced serious consequences for their marketing choices. Softly is a sustainability AI navigator and analytics platform that helps businesses reduce the risk of non-compliant product claims, and through her experience, Hughes shares how understanding these risks is crucial for companies looking to navigate this evolving regulatory environment without falling into costly traps.
CDU: A recent lawsuit against Tom’s of Maine/Colgate over their recyclable claim has raised significant concerns. What are the main risks associated with making recyclable claims in the personal care and beauty industry?
Mollie Hughes (MH): The risks of making a claim that doesn’t meet regulations include government enforcement including warnings and fines, litigation, such as class action lawsuits, reputational damage, and reduced consumer trust.
A thorough understanding of what you legally can and can not say about a product is extremely important - there are regulations and guidelines on the federal, state and local levels having to do with marketing claims. It’s also important to understand case law precedents having to do with the marketing claim you wish to make.
For example, Tom’s of Maine / Colgate is facing a class action suit (Della v Colgate Palmolive) for claiming their toothpaste tube is recyclable. While the toothpaste tubes were technically made with materials that are recyclable, most recycling facilities don’t have the means to actually recycle the product because they don’t meet size requirements.
The FTC’s Green Guides specify that products should not be labeled as recyclable if their shape, size, or other attributes prevent them from being accepted by recycling facilities. Additionally, if fewer than 60% of consumers can recycle a product, it shouldn’t be marked as recyclable. (Note: This can be found in 16 C.F.R. § 260.12(d) i of the Green Guides).
These are the sorts of regulations that brands need to be aware of before making a claim. While these examples have to do specifically with a “recyclable” marketing claim, there are regulations surrounding all kinds of green claims.
Keeping up with evolving regulations and case law is not easy, but the risk is real, the cost is high, and companies need to take it seriously.
CDU: The Nation Advertising Division's recently published recommendation for P&G Native Products concerning their "Simple" and "Born in the USA" claims highlights potential pitfalls. What challenges do brands face when making product origin claims?
MH: Brands face several challenges when making product origin claims:
- Ingredient Claims: P&G’s Native Products faced scrutiny when the National Advertising Division (NAD) recommended modifying or discontinuing the “simple ingredients” claim. In this case brought against P&G, the NAD recommended that P&G modify or discontinue using “simple ingredients” when describing their Native product ingredients. The issue has to do with reference to individual ingredients being simple vs the product formulations as a whole. However, because the products contain few or minimal ingredients, Native’s tagline, “Clean. Simple. Effective.” was found to be substantiated.
- Made in USA Claims: We call the legal landscape having to do with claiming your product is Made in USA - Red, White and Risk. The risk stems from a combination of the FTC being vague, and brands not understanding the substantiation needed to make the claim.
The initial confusion sets in because the Federal Trade Commission (FTC) doesn’t clearly define “all or virtually all,” when it comes to Made in USA claims. Furthermore, oftentimes brands don’t realize that this claim is determined by the cost of goods sold.
In order to make a “Made in USA” claim, “all or virtually all” of the cost of the goods sold must be attributable to domestic sources. In the case of Native brands, P&G did not provide the evidence needed to prove the cost of the product ingredients/products came from the United States.
CDU: As demonstrated by these cases, litigation surrounding "all-natural" claims has become increasingly common. What are the key factors that make these claims particularly risky for personal care and beauty brands?
MH: “All-natural” claims pose several risks for personal care and beauty brands due to increasing litigation and consumers prioritizing natural products. One pitfall comes when a manufacturer doesn’t take into consideration the hidden consequences of processing.
For example, Burt’s Bees is facing a class action lawsuit claiming its "100% natural" label was misleading due to a hydrogenation process that allegedly transforms natural oils into synthetic ingredients. Despite Burt's Bees arguing that hydrogenation doesn't make oils unnatural, the case is moving forward, highlighting the need to ensure that ingredients remain natural post-processing.
The Burt’s Bees case demonstrates that when promoting 100% natural products, you need to be 100% certain that your ingredients stay natural after processing.
Additionally, terms like “100%” or “All” are challenging to substantiate and invite scrutiny from consumers and regulators. Absolute claims are particularly problematic in the beauty and personal care industry, where meticulous proof is required to support such definitive statements.
With the growing preference for natural products, any discrepancy between a product’s claim and it’s actual composition can lead to significant backlash and legal action. Consumers expect transparency and accuracy in labeling.
Further, using absolute terms seem to put brands on the radar of regulators. Regulators tend to closely examine products with claims like “100% natural” to ensure compliance, increasing the risk of enforcement if the claims are found to be unsubstantiated.
CDU: How do risky marketing claims impact consumer trust and brand reputation in the personal care and beauty space?
MH: Negative press can severely damage consumer trust, especially in today’s world which is riddled with fast spreading social media. Customers rely on companies to accurately represent their product and once customer trust is broken, it is very difficult to regain.
While in most cases, companies don’t release the cost of the damage to their reputation stemming from misleading marketing, we do know it can be costly and does negatively affect customer loyalty and sales.
One cautionary tale is the baby care division of J&J which is working to recover after massive consumer protection lawsuits having to do with their baby powder causing cancer. Not only is it costing the company hundreds of billions in damages, division sales also dropped by 20%.
CDU: From your perspective, why do you think we are seeing an increase in litigation and scrutiny over marketing claims in the personal care and beauty sector?
MH: There is increased scrutiny and costly litigation in the personal care and beauty sector because these are products that are typically applied to our bodies. Consumers are demanding product transparency and associate what goes into and onto our bodies with health and wellness.
Consequently, businesses are responding by developing healthier and more sustainable products and want to advertise their efforts. However, they struggle with the best way to do this due to the plethora of new laws and regulations having to do with what can and can not be said about a product. As a result, 50% of green marketing claims are not compliant to new guidelines.
