Beware the beauty of sustainability: US regulatory risks and class action lawsuits

Loeb & Loeb's Kristen Klesh discusses the inherent risks of beauty brands advertising their products' green credentials

Fashion and beauty brands are increasingly focused on reducing their environmental impacts while promoting social and governance values related to the well-being of people and the planet, a topic we previously discussed in our recent writings

Much has been reported on the impact of the fashion industry on global emissions, and many countries and individual US states have focused legislative efforts on production processes that contribute to the bulk of this impact. Recent estimates indicate that a third of landfill waste is from the beauty industry; 120bn units of packaging a year come from beauty products, and shipping contributes more than 1bn tons of carbon dioxide a year. Given this impact, the beauty industry is increasingly focused on sustainability initiatives and on touting these efforts to consumers through advertising campaigns. This advertising, however, raises regulatory as well as class action litigation considerations.

Key Takeaways:

· There still is no clear regulatory guidance in the U.S. regarding the meanings of terms such as clean, free, reef safe and nontoxic, which results in inherent class action litigation risk for brands that advertise their products using these terms.

· Third-party certifications are not a substitute for claim substantiation for health-claim implications.

With a rise in consumer interest in personal care products that are perceived as more “natural” and produced in a sustainable manner, the beauty industry has increasingly focused on advertising and labeling claims that emphasise (expressly or implicitly) that their products are safe for humans as well as the environment. Popular examples include clean, free, reef safe, nontoxic and similar advertising claims. Unfortunately, however, many sustainability and safety-related claims do not have a clear regulatory definition that industry can rely on when establishing substantiation for these claims. The absence of clear regulatory guidance leaves open the door to various interpretations of these terms and, in turn, class action litigation risk. Plaintiffs have generally alleged that these terms broadly imply that beauty products are all natural, safe and free of any synthetic ingredients—even when these terms are expressly and narrowly defined in the labeling of beauty products. 

For example, on 11 November 2022, Sephora Inc. became the subject of class action complaint filed in the US District Court for the Northern District of New York alleging that the company’s Clean at Sephora programme contained beauty products with ingredients that are “inconsistent with how consumers understand the term ‘clean'". On these grounds, the plaintiff alleged that Sephora’s clean claims were false and misleading, in violation of New York’s state consumer protection laws. According to the plaintiff, clean in the context of beauty means that the products are exclusively “made without synthetic chemicals and ingredients that could harm the body, skin or environment". Importantly, the plaintiff made these allegations even though Sephora expressly defines its clean claim by listing on its website which specific ingredients are avoided in its clean beauty products. Sephora has filed a motion to dismiss, but the court has yet to rule.

Similarly, advertisers of products (including cosmetic moisturisers) containing sunscreen have faced class action litigation regarding reef-safe and reef-friendly claims on the grounds that these claims imply that the products do not contain any chemicals that could be potentially damaging to reefs, including avobenzone, homoslate or octocrylene. These allegations arise even when the product’s packaging includes a disclaimer linking any reef-safe claim to a statement that the product does not contain oxybenzone or octinoxate, specifically. In at least one class action, Moran v. Edgewell Personal Care, involving Banana Boat sunscreen, the court denied the sunscreen manufacturer’s motion to dismiss on grounds that the issue of whether a “reef friendly — no oxybenzone or octinoxate” claim on the sunscreen labels also implied that the sunscreen did not contain any other potentially reef-damaging chemicals was a factual issue, not a matter of law.

Finally, advertisers across various industries, including beauty products, often aim to mitigate risk in connection with sustainability and similar environmental claims through third-party certifications. These third-party (nongovernmental) certifying bodies often tout that products meeting their certification standards are sustainable, nontoxic or safe for humans and the environment. While sustainability-related certifications can help add credibility and substantiation to advertising claims, brands must remain aware that these certifications serve as advertising claims, including potential health-related claims. Any health- or safety-related claims are subject to strict substantiation standards pursuant to the Federal Trade Commission’s recently issued December 2022 Health Products Compliance Guidance, which sets forth exacting standards for health- and safety-related advertising claims. Advertisers making green, sustainable or other environmental claims must make sure they have adequate substantiation for any related health-claim implications.

Kristen Klesh is a partner in Loeb & Loeb’s Washington, DC, office and advises clients on a broad range of Food and Drug Administration (FDA), Federal Trade Commission (FTC) and related state law regulatory compliance matters throughout all stages of the product life cycle. She can be reached at [email protected].

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