Stay ADvised: What's New This Week, November 8
In This Issue:
- MLM Takes Down Iffy Product and Earnings Claims After DSSRC Action
- Pop Go the Potentially Deceptive Strawberry Pop Tart Claims in Kellogg's Class Action
- From Plastic Products to All Products, New California Law Expands Environmental Labeling Rules
MLM Takes Down Iffy Product and Earnings Claims After DSSRC Action
Like the FTC, voluntary self-regulation keeps a sharp eye on questionable health-related product and potential consumer earnings claims and has taken one multi-level marketer company to task for potentially misleading claims.
As part of its ongoing monitoring of advertising claims in the direct selling industry, the Direct Selling Self-Regulatory Council (DSSRC) recommended that Lifebrook discontinue certain health and earnings claims promoting its brand of juices, supplements, and other products made with the so-called "superfood" Aronia berry and marketed for health and wellness.
Lifebrook promotes itself as a "community of farmers, consumers and entrepreneurs" whose "mission is to enhance the health of millions of people," and claims it chooses to sell its products by "passing the word along from one person to the other and the profits too" rather than "wasting money on expensive TV ads." Lifebrook found itself in the DSSRC's crosshairs in large part over performance claims made on social media and on the company's website stating that its products "can treat or protect against serious health-related conditions" such as COVID-19, heart disease, high blood pressure, and arthritis.
Though Lifebrook did take down most of the claims at DSSRC's recommendation, the watchdog nonetheless took issue with social media posts made by the company's salesforce that remained online despite Lifebrook's takedown requests. DSSRC recommended the company pursue available disciplinary remedies based on its company policies and procedures and, if necessary, send take down notices or correspondence to the social media companies where the posts appeared requesting they be taken down.
DSSRC also concluded earnings claims such as "The sky is the limit" could be reasonably interpreted to mean salesforce members could make a significant income. Though Lifebrook removed some claims, DSSRC recommended the company also remove the claim "How much can you earn? It's entirely up to you" from its site.
Lifebrook was among the companies that received a Penalty Offense Notice from the Federal Trade Commission (FTC) last week warning over 1,000 companies to steer clear of false or misleading money-making claims. The DSSRC's action likely occurred before Lifebrook received the notice, but the company's current (as of this writing) pop up disclaimer warning salesforce members not to make false claims may be a result of the FTC's letter as much as DSSRC's action.
Pop Go the Potentially Deceptive Strawberry Pop Tart Claims in Kellogg's Class Action
"Timeless, Yet Yummy," reads the slogan on the package of Kellogg's Frosted Strawberry Pop Tarts.
Maybe so, but one plaintiff alleges the "strawberry" claims are bananas. She's filed a class action lawsuit alleging the labeling of the Strawberry Pop Tarts is misleading because it gives consumers the false impression that the pop tart filling "contains a greater relative and absolute amount of strawberries than it does." The suit alleges causes of action under the Illinois Consumer Fraud and Deceptive Business Practices Act and other state consumer fraud statutes.
The Pop Tarts' packaging emphasizes the strawberry flavor, and promotes the tarts based on that representation. In addition to the vibrant red color of the filling and the name "Frosted Strawberry" which appears on the label, the complaint highlights a featured recipe for strawberry shortcake using the Pop Tarts, as well as images of strawberries.
Kellogg's Frosted Strawberry Pop Tarts actually contain, however, very little strawberry, claims plaintiff. In fact, the ingredients list on the back label shows that the tarts contain less than 2 percent of "wheat starch, salt, dried strawberries, dried pears, and dried apples." Based on the "stated ingredients," and an "estimate and analysis of the filling," the product contains more non-strawberry ingredients than strawberry ingredients, says plaintiff.
"Whether a toaster pastry contains only strawberries or merely some strawberries and a significant amount of other, less value fruit ingredients, is basic front label information consumers rely on when making quick decisions at the grocery store," alleges plaintiff.
The case was filed by Spencer Sheehan, the New York attorney previously referred to as the "Vanilla Guy" who is behind more than 400 false marketing lawsuits, most of them alleging deceptive marketing of food—from vanilla, to fudge, and now to strawberry.
Though judges in these cases have certified the classes so far, this Strawberry Pop Tarts matter seems to have hit a nerve, making the news cycle in a big way. To some consumer advocates, that's not a bad thing, if it educates consumers about deceptive marketing. "I think there's some merit to his work," said the executive director of Truth in Advertising, according to recent press reports.
From Plastic Products to All Products, New California Law Expands Environmental Labeling Rules
California has signed into law a bill that makes it illegal for companies to label a product "compostable," "biodegradable," or "home compostable" unless it meets certain criteria.
AB 1201, the Better Composting Standards Act, expands California Public Resources Section 42357, which regulated the use of those labels on "plastics," to apply to all consumer "products." The amendment is part of a state crackdown on "greenwashing" in environmental marketing claims that has targeted everything from misleading recycling claims to plastic utensils. The bill was signed into law by Governor Gavin Newsom and goes into effect on January 1, 2022.
The newly expanded law prohibits companies from implying that a product will break down, biodegrade, or decompose unless it "meets one of several specified standards relating to environmental marketing claims." It will significantly broaden restrictions on when and how companies can market consumer products as "biodegradable" or "compostable."
Aside from a narrow exemption for fiber products that don't incorporate any plastics, the expanded law is likely to apply to "every consumer product." As for what constitutes "product" under the law, the definition is as broad as it gets: it includes a consumer product or part of a product used, bought or leased for any purpose, a package component, a bag, or a food or beverage container.
To meet the criteria for being "biodegradable", a product must satisfy two specific American Society of Testing and Materials (ASTM) standards or have OK compost HOME certification, a seal that identifies a biodegradable product. The law also details the types of products which may not be sold as "home compostable."
Failure to comply with the law could put businesses on the hook in public lawsuits for penalties of up to $2,500 per violation and in private suits seeking injunctions and restitution.
California is widely known for being at the forefront of regulation of environmental marketing. Still, the law is part of what some have called a "landmark year" in environmental litigation in California, with multiple laws proposed and passed seeking to regulate plastic use and environmental marketing and "greenwashing."
Given the significant broadening of these marketing restrictions from plastics to all consumer products and California's willingness to enforce environmental laws under the state's Unfair Competition Law (UCL), companies that market their products with environmental claims such as biodegradable or compostable should review their marketing claims to ensure they will be in compliance with the newly expanded law come January.