Demand for "Organic" Products is Growing, But Consumers Do Not Necessarily Understand What the Term Entails

Product labels offer valuable information, particularly as consumers become increasingly concerned about what is contained in the products they buy. With growing demand for clean, green, and eco-friendly products, many manufacturers have placed increased emphasis on how they market their products, but not all claims are created equal and in fact, as the Environmental Working Group puts it, many “marketing claims about the source, safety and effectiveness of products  and their ingredients often aren’t worth the labels they’re printed on.” 

Of the terms that brands use in an effort to boost their bottom lines by way of buzzy marketing jargon, the U.S. Department of Agriculture (“USDA”)’s organic label is a particularly popular one, and two recent decisions from the Federal Trade Commission (“FTC”) suggest that the government agency is, in fact, paying attention, especially when the word “organic” is used inappropriately on nonfood items, such as clothing and personal care products, where researchers have found that federal authority is less straightforward than it is for food products. 

The word “organic” to describe a hydrating face serum, tinted moisturizer, or the cotton used to make a t-shirt or pair of jeans is used, in no small number of cases, synonymously with other marketing-centric descriptors, such as “clean,” “green,” and/or “eco-friendly.” However, unlike those other claims, “organic” is defined (by law) and thus, comes with a stringent list of conditions that must be met before the descriptor is used. 

The Market for and the Confusion Over “Organic” 

The rise of USDA organic was heralded by food products beginning largely in the 1990s with the passage of the Organic Foods Production Act, which required that the USDA develop national standards for organic products and ultimately led to the creation of the government agency’s National Organic Program (“NOP”). Food products that undergo a rigorous certification process and which are deemed to comply with the standards set out in the NOP may legally bear an “organic” label. Specifically, agricultural products that contain at least 95 percent certified organic ingredients meet these standards and can display the USDA organic seal or use the phrase “made with organic products” – the gold standard among food labels that has significant cachet in the marketplace.

Driven largely by younger demographics concerned about the things they are putting in and on their bodies (and the bodies of their children), the demand for organic nonfood products is growing rapidly, with sales jumping by 10.6% to $4.6 billion in 2018, alone. As such, companies are slapping “organic” labels on all sorts of nonfood products, such as textiles, household cleaners, and personal care products, and services like house cleaning and dry cleaning. The result? A perception amongst consumers that the “organic” products are healthier, cleaner ones than the non-organic options.

Even more significantly, this use of the term “organic” creates a perception that the products at issue are subject to the same rigorous standards as those out forth by the USDA’s NOP. 

Sometimes that is the case. Personal care products, for instance, are among the burgeoning categories of nonfood products that are making a beeline for “organic” marketing claims, since they can be made from agricultural ingredients, such as flower or fruit extracts and oils. The USDA allows personal care products that contain agricultural ingredients and meet the USDA/NOP organic standards to be certified organic. As a result, you can find mosquito repellent, shampoo and face cream bearing the USDA certified organic seal.

But beyond these limited categories, products with non-agricultural ingredients do not generally fall within the NOP program, and the USDA does not regulate them. For example, the agency has no authority over cosmetics that do not contain agricultural ingredients or meet NOP organic standards. In reality, cosmetics are regulated by the Food and Drug Administration (“FDA”), which has expressed little interest in policing organic claims. Yet, seemingly countless cosmetics come with the word “organic” splashed on their packaging. 

While the FDA has generally proven unwilling to address this discrepancy, the Federal Trade Commission (“FTC”) can investigate and pursue formal legal action against companies making false, misleading or deceptive organic claims. Until recently, though, the government agency tasked with promoting consumer protection in the marketplace, has been reluctant to do so, partly to avoid duplicating the USDA’s efforts. 

However, this began to change in 2015 when the USDA and the FTC conducted a study on public understanding of organic claims for nonfood products. What they found was striking: consumers had observed sweeping variations in the use of the term “organic” when used on food versus nonfood products. As a result, the majority of consumers were confused about whether these “organic” claims meant the same thing as claims on food products. They also largely revealed that they did not understand that USDA had limited authority in this area. 

These findings were bolster by the results of a survey conducted by nonprofit Cornucopia Institute. In that organic-centric survey, the organic industry watchdog asked consumers whether a shampoo labeled organic was certified by the USDA. Approximately 27 percent of respondents said yes, 55 percent said no, and the rest were unsure. 

The Institute urged the FTC to "harmonize label regulation with the [NOP organic] standards in a simple way: Prevent the term ‘organic’ from being used on products and services that generally fall outside the scope of the USDA’s National Organic Program.” 

This is unlikely to happen, but one useful step would be for the FTC to include information about organic claims in its Green Guide, which is designed to help marketers avoid making misleading or deceptive environmental claims. 

Mounting Violations

Against that background, the FTC stepped in for the first time in 2017 and initiated an investigation of deceptive “organic” claims on baby mattresses. According to a consent order filed with the agency, Moonlight Slumber, LLC made unsubstantiated representations on its mattresses, including that the mattresses were “organic.” In fact, the company’s products were made of a majority of non-organic materials, mainly polyurethane, a plastic produced almost entirely from petroleum-based raw materials. 

Last year, in October 2019, the FTC took on – and fined – another company, Truly Organic, $1.76 million for falsely advertising its body washes, lotions, baby, hair care, bath and cleaning products as “certified organic,” “USDA certified organic,” and “Truly Organic.” Despite having some ingredients that could be organically sourced, Truly Organic products either contained ingredients that were not approved by NOP or were not organically sourced.

These two instances put a larger pattern of misuse in the market into perspective, one that is particularly striking as the market for natural and organic personal care products continues to grow, which is evidenced by the popularity of celebrity brands like Gwyneth Paltrow’s Goop and Jessica Alba’s Honest Company. Demand for this category of goods is projected to reach $17.6 billion by 2021. 

Sarah J. Morath is a Clinical Associate Professor of Law and Director of Lawyering Skills and Strategies at the University of Houston. Edits/additions courtesy of TFL.