By Riëtte van Laack –
As we previously reported, in April 2016, the FTC announced several settlements regarding all natural claims for cosmetic products. In addition, the FTC filed an administrative complaint against California Naturel, Inc., (the Company) for falsely advertising its sunscreen product as “all natural” in violation of Sections 5 and 12 of the FTC Act. On December 12, 2016, the FTC issued an opinion granting summary decision in favor of Complaint Counsel, FTC staff, against California Naturel. The Final Order bars the Company from misrepresenting its products as all natural.
The facts of the case are not complicated. The FTC’s complaint alleged that California Natural, Inc. marketed its sunscreen product as all natural whereas the product was not all natural. In fact, in its answer to the complaint, California Natural Inc. admitted that its "all natural" sunscreen contained 8% synthetic dimethicone.
The standard for review for a summary decision in an administrative proceeding is the same as for summary judgment in a federal case; a motion will be granted only if there is no issue as to any material fact. In this case, the defendant did not dispute that its sunscreen product contained 8% synthetic ingredients. Thus, Complaint Counsel moved for a summary decision.
Although California Naturel admitted that its product included synthetic material, it argued that the claim was not misleading because, after the FTC had initiated its investigation, California Naturel included a disclaimer on its website alerting consumers to the presence of the synthetic dimethicone. Although the FTC acknowledged that this “recent addition . . . of a disclaimer on its website does not excuse deception that has already occurred,” the FTC decision nevertheless addressed the effectiveness of the disclaimer.
The FTC concluded that the disclaimer was not effective because the disclaimer, was at the bottom of the webpage and thus far removed from the prominent “all natural” claims – and, allegedly, not visible at all without scrolling down. The FTC concluded that the disclaimer did not negate the net impression conveyed to consumers that the product is “all natural.”
Commissioner Ohlhausen dissented in part and issued a separate statement because she disagreed with the FTC’s decision to address the disclaimer in the summary decision.
Having found liability for false and misleading advertising, the FTC entered a Final Order to address California Naturel’s alleged unlawful conduct. The core substantive provisions of the Final Order prohibits California Naturel from misrepresenting (a) whether a product is all natural or 100% natural; (b) the extent to which a product contains any natural or synthetic ingredient; (c) the ingredients or composition of a product; and (d) the product’s environmental or health benefits. The Order will terminate in twenty years.
California Naturel may appeal the summary decision and final order within 60 days to a United States Court of Appeals.