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September 18, 2023
‘Feel good’ marketing claims can leave brands with a significant hangover if not done right, attendees at a recent symposium were told.
A session at the recent Nutrition Law Symposium in Lehi, Utah focused on the issue, laying bare the potential pitfalls. The Sept. 8 symposium was put on by the Mountain West chapter of the Association of Corporate Counsel and hosted by network marketing brand Young Living at its headquarters.
Attorneys Nathan Archibald and Joe Paunovich of the firm Quinn Emanuel presented the session. They structured their presentation as a series of theoretical scenarios of how brands might seek to make claims and benefit from “cause marketing,” eco-friendly claims and other statements.
The presentation lumped various manifestations of this kind of marketing under the heading of “halo claims.” It can be a powerful incentive to buy, the attorneys noted. They backed up that conclusion with the following data points:
According to Forbes, 87% of consumers said they would buy a product with a social benefit if given the opportunity.
Information from Forbes also indicated 88% of consumers said they would be more loyal to a brand if it supported social or environmental issues.
And the National Retail Foundation found that 80% of consumers aged 18-34 said they would be willing to pay more for environmentally friendly products.
In one of the scenarios, the attorneys addressed the concept of “cause marketing.” This refers to the practice of claiming support for various social causes either by offering to donate products or to devote a certain amount of the sale proceeds to a given cause.
In the scenario, a theoretical brand was claiming to devote $1 of every sale to support a community garden.
This claim can run into problems if caveats for the offer are not explicitly spelled out, Archibald said. Many of these schemes include a maximum donation amount, which sometimes is not specified. Thus, consumers motivated to make a purchase based on the claim could be considered to have been defrauded if the maximum donation amount had already been reached before they bought the product.
This needs significant planning, Archibald advised. What if a brand had printed 50,000 labels with the claim on them, and the donation limit was already reached after 5,000?
“You can’t just put the claim on your product and be done with it,” Archibald said.
Such a situation cost the pop star Lady Gaga an additional $107,500 donation (not including her legal fees) to settle a lawsuit that alleged not all the proceeds raised from the sale of $5 wristbands went to help the victims of the 2011 earthquake and tsunami in Japan. The plaintiffs alleged additional shipping fees were tacked onto the bracelets and proceeds from those fees were not donated to the relief fund.
The attorneys noted 25 states have rules specifically addressing the parameters of so-called commercial co-ventures, or CCVs.
The rules include written agreements between the brand and the charity, a charity registered in the state in which the claim is being made, recordkeeping and accounting requirements, and more.
In another scenario that examined the question of claims of environmental benefits, attorneys noted claims like “eco-friendly” are not specific enough to pass muster.
Another theoretical scenario noted that a claim relating to “restoring farmland” would also need clarification and quantification to avoid unwanted attention both from the Federal Trade Commission and from the plaintiff’s bar.
Such claims are addressed in FTC’s Green Guides.
“It’s not a statutory document but it is looked to as the bible or treatise of what to do in this space,” Paunovich said, referring to the Green Guides.
The boundaries of what’s acceptable for halo claims, especially in the realm of carbon footprints, are slowly being drawn via case law, attorneys noted.
One case, Dwyer vs Allbirds, was recently decided in the Southern District of New York. The shoe brand Allbirds was sued over the advertised carbon footprint of its shoes (which feature woven woolen tops) and the methods of calculating that.
The plaintiffs alleged the claim was misleading because the shoe manufacturer did not include the carbon footprint of certain animal inputs, such as the sheep from which the wool was sourced.
The court sided with Allbirds, saying the brand did not specifically claim that it did count that input.
The key takeaway is without consensus yet on how these inputs should be calculated, full transparency is the best defense, the attorneys said.
Another case that has yet to be decided, Berrin vs Delta Airlines, was filed over the company’s claim that it is carbon neutral. Delta has achieved this to its own satisfaction by investing in carbon offsets that are being offered by various third parties in the open market.
Paunovich said the trouble is that verification in the emerging carbon offset market is still sorely lacking.
“There are carbon sink projects all around the world and there is rampant fraud,” he said. “Up to 90% of carbon offset projects are ‘phantom’ projects.”
Paunovich concluded, “If the court decides Delta is responsible to look through the carbon offset market and decide which projects are fraudulent, that will have a big impact on everyone making these claims.”
Senior Editor, Informa
His approach to industry journalism was formed via a long career in the daily newspaper field. After graduating from the University of Wisconsin with degrees in journalism and German, Hank was an editor at the Tempe Daily News in Arizona. He followed that with a long stint working at the Rocky Mountain News, a now defunct daily newspaper in Denver, where he rose to be one of the city editors. The newspaper won two Pulitzer Prizes during his time there.
The changing landscape of the newspaper industry led him to explore other career paths. He began his career in the natural products industry more than a decade ago at New Hope Natural Media, which was then part of Penton and now is an Informa brand. Hank formed friendships and partnerships within the industry that still inform his work to this day, which helps him to bring an insider’s perspective, tempered with an objective journalist’s sensibility, to his in-depth reporting.
Harkening back to his newspaper days, Hank considers the readers to be the primary stakeholders whose needs must be met. Report the news quickly, comprehensively and above all, fairly, and readership and sponsorships will follow.
In 2015, Hank was recognized by the American Herbal Products Association with a Special Award for Journalistic Excellence.
When he’s not reporting on the supplement industry, Hank enjoys many outside pursuits. Those include long distance bicycle touring, mountain climbing, sailing, kayaking and fishing. Less strenuous pastimes include travel, reading (novels and nonfiction), studying German, noodling on a harmonica, sketching and a daily dose of word puzzles in The New York Times.
Last but far from least, Hank is a lifelong fan and part owner of the Green Bay Packers.
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