Stay ADvised: What's New This Week, June 28
In This Issue:
- Sierra Club Alleges Coca-Cola and Nestlé's Blue Triton "Sold" Recycling "Myth"
- Direct Seller's Attempt to Remove Offending Health and Earnings Claims Insufficient
- NARB Says Boost Mobile Claims Far From "Unlimited," Upholds NAD Decision
Sierra Club Alleges Coca-Cola and Nestlé's Blue Triton "Sold" Recycling "Myth"
Corporate sustainability practices sell, or so believe the corporations that tout their environmentally conscious practices. Recently, however, the purported benefits of those practices have come under fire, including in a recent lawsuit filed by the Sierra Club in the Northern District of California accusing the Coca-Cola Company and BlueTriton Brands (formerly known as Nestlé Waters North America) of making false claims regarding the recyclability of their single-use plastic water bottles. A consumer class action lawsuit filed concurrently by the Sierra Club's counsel makes similar allegations against the same companies and Niagara Bottling as well.
According to the lawsuits, defendants' claims that their bottles are 100 percent recyclable are part of marketing campaigns that make "misleading and deceptive recyclability claims on their products" and so "defraud the public about plastic water bottles." The marketing "falsely informs consumers that they are making an environmentally responsible choice when they purchase" and seek to recycle these bottles, claims the Sierra Club.
The Sierra Club suit alleges that, "[i]n truth, Defendants' single-use plastics are damaging the environment even when consumers properly dispose of the bottles in a recycling bin. If consumers knew the truth, they would make more informed decisions about consuming products that are truly sustainable." According to the dual complaints, that "truth" is that more than a quarter of the plastic deposited for recycling cannot be recycled at all because of contamination and processing loss, and many are not recycled at all simply because of an overloaded domestic recycling system. Further calling into question the 100 percent recyclable claim, the labels and caps on the bottles are often not made of recyclable materials.
Nonetheless, the complaints allege, defendants take advantage of consumers' increasing appetite for more sustainable products by falsely claiming that their plastic bottles are entirely recyclable when they are not. The suits allege that to further deceptively "reassure the public about the sustainability of single-use plastics," defendants implemented a marketing campaign called "Every Bottle Back," which promotes the "100% Recyclable" claim that appears on the plastic water bottles' packaging and in advertising.
The Sierra Club complaint argues that the advertising not only constitutes actionable "greenwashing" under California's Environmental Marketing Claims Act and deceptive marketing in violation of the state's Unfair and Deceptive Trade Practices Act, but also violates codified California public policy and the Federal Trade Commission's Green Guides.
In both lawsuits, plaintiffs seek an injunction forcing the beverage manufacturers to cease the allegedly deceptive marketing. The nonprofit makes the case that should the court deny an injunction, it will continue to expend significant money and resources to combat the alleged misrepresentations because the companies' deceptive marketing drives up plastic waste and directly frustrates the organization's mission. The class action lawsuit alleges consumer protection causes of action and seeks damages in addition to an injunction.
These suits join several already existing that allege bottlers are falsely marketing claims their plastic bottles are recyclable, as we reported on last week with litigation calling Coca-Cola's "World Without Waste" campaign "greenwashing," as well as other pending litigation against other major producers of plastic bottles.
These and other companies face action on the legislative front as well. Among those significant resources the Sierra Club says it has expended to fight plastic waste is support for California's proposed bill SB 343—California's Truth in Labeling for Recyclable Materials law—which prohibits the use of the word "recyclable" on unrecyclable products.
Direct Seller's Attempt to Remove Offending Health and Earnings Claims Insufficient
The advertising industry's direct selling self-regulatory group has warned a marketer of nutritional supplements that its salesforce members are making inappropriate health claims and that its website makes unsupported earnings claims, urging the company to take additional action despite its agreement to follow the direct selling self-regulatory watchdog's recommendations.
The Direct Selling Self-Regulatory Council (DSSRC) looked into performance, health claims, and earnings made by direct marketer, Zinzino, which sells nutritional supplements and is based in Sweden with a Jupiter, Fla., subsidiary. The DSSRC did not like what it found.
DSSRC noted social media posts by salesforce members that characterized a Zinzino product called "BalanceOil" as protective against COVID-19, and further communicated the unsupported claim that "Zinzino products can protect against serious health-related conditions." Although the claims were made by Zinzino salesforce members originating in Sweden, the DSSRC concluded the company had not gone far enough to ensure that the claims were removed.
To remedy this, DSSRC urged Zinzino to provide copies of the communication the company said it sent to the salesforce members asking to take down the health claims. The DSSRC recommended that Zinzino take additional action to ensure their removal, including by sending take-down notices directly to the salesforce member or using the reporting mechanism on the website or social media platform. Even "if the subject claim by a former salesforce member occurs on a website or platform without a reporting mechanism, DSSRC recommends that the Company should contact the website or platform in writing and request removal."
DSSRC also called out Zinzino's earnings claims, which it believed overstated the company's earnings potential by calling Zinzino a "unique opportunity" with "minimal risk." As per the Federal Trade Commission, claims that suggest a salesforce member can achieve career-level income through direct selling are "likely to be false and misleading," said the DSSCR.
Moreover, as DSSRC's guidelines state, phrases such as "full-time income" and "financial freedom" carry a particularly high risk of misleading consumers. By encouraging would-be salesforce members to "take the first step towards health and wealth today," Zinzino communicated a claim that could "be reasonably interpreted by consumers as meaning that they can expect to earn significant (i.e., 'full–time') income." DSSRC recommended that Zinzino remove or significantly modify the statements.
This matter is a reminder that direct marketing companies are responsible for the ways in which their salesforce members promote their products online and need to take more than cursory action to remedy misleading claims. The decision provides further guidance on what steps direct marketing companies must take to ensure unsupported claims online are deleted from social media.
NARB Says Boost Mobile Claims Far From "Unlimited," Upholds NAD Decision
What is old is new again, as the National Advertising Review Board (NARB) upheld the National Advertising Division's (NAD) decision recommending that Boost Mobile discontinue the claim that its data plan is "unlimited." Such "unlimited" claims have come under fire from regulatory and consumer groups for years.
In the advertising challenged by AT&T, Boost Mobile promoted its "Go Unlimited" plan with 35 GB of 4G LTE data, with an express disclosure that after the "monthly data allotment is exceeded, you will be reduced to 2G data speeds for the remainder of the month." Agreeing with NAD, NARB held that even with the disclosure, a reasonable consumer would not characterize Boost's high degree of "throttling" 4G LTE data down to 2G as "unlimited" given that such slower speeds "makes standard data operations virtually unusable."
NAD had found Boost's "unlimited" claim unsupported because Boost's "unlimited" product description would not "meet consumers' current expectations regarding material terms" given that once consumers reached the data cap, they would be unable to use the phone in a way consistent with reasonable expectations associated with an "unlimited data" plan. This did not apply to talk and text, which was indeed unlimited.
NARB agreed and concluded that Boost had failed to show proper support for the "unlimited data" claim "as reasonable consumers understand that term," given what the challenger described as "extreme" slowing down of the service once the data cap was reached. Under the narrow circumstances presented, NARB agreed that a disclosure could not resolve the misleading takeaway. In NAD parlance, a disclosure cannot be used to contradict the main claim.
NARB issued an intentionally narrow ruling, finding that the term "unlimited data" may be used even when some data throttling occurs but not in this case because the advertiser had "crossed the line" by over-throttling, rendering the claim expressly false. NARB declined to provide further definition, stating it "expresses no views as to where the proper line should be drawn."