Organic Marketer Settles for $1.76M With FTC

Advertising Law

To settle charges of falsely advertising its bath and beauty products as organic and vegan, a Miami-based company and its owner agreed to a $1.76 million deal with the Federal Trade Commission (FTC).

Truly Organic and owner Maxx Harley Appelman advertised and sold haircare products, body washes, lotions, baby products, personal lubricants, cleaning sprays, bath bombs and soaps as “100% organic,” “certified organic,” “USDA certified organic” and “truly organic” as well as vegan, dating back to February 2015.

The claims appeared on the defendants’ website and social media accounts as well as on third-party websites where the products were also sold.

Despite the statements that the products were wholly or certified organic, some of the products contained nonorganic ingredients and others contained no organic ingredients whatsoever, the FTC alleged, with none of the products ever receiving an organic certification from the U.S. Department of Agriculture’s (USDA) National Organic Program. Nor were the products vegan, the agency said, as they contained ingredients such as honey and lactose.

In 2016, the USDA reached out to the defendants to notify them of complaints the agency had received about the marketing of the Truly Organic products. Appelman responded that “previous management” had erroneously used the USDA organic seal and said it had since been removed, according to the FTC’s complaint.

However, the next day he sent an email to a merchandise manager at Urban Outfitters and claimed that all of the company’s products were “certified organic (and actually the most organic in the world)” and “everything is vegan, made in the USA, cruelty free, fair trade, non gmo and gluten free,” the FTC alleged. The defendants continued to advertise their products as organic and vegan for several more years, the agency added.

To settle the charges of violations of Section 5 of the FTC Act, the defendants – who neither admitted nor denied the allegations—agreed to pay a monetary judgment of $1,764,451.

They are also prohibited from making deceptive claims and misrepresentations that any goods or services are wholly or partially organic, contain or use organic ingredients, are certified organic, are vegan, or have been evaluated by a third party based on their environmental or health benefits or attributes.

To read the complaint and stipulated order in FTC v. Truly Organic, Inc., click here.

Why it matters: “To know if a product is truly organic, consumers have to rely on companies to be truthful and accurate,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a statement. “That’s why we’ll hold companies accountable when they lie about their products being organic, especially when they’ve used fake certificates and ignored USDA warnings.” Commissioner Rohit Chopra filed a statement about the case, praising the resolution in comparison to other agency settlements that did not include monetary judgments. “I believe it would be helpful for the Commission to codify this approach in a Policy Statement addressing unlawful conduct that is dishonest or fraudulent,” he wrote. “In 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.”