INSIDER Law
FTC Official: Research Needed to Study Consumer Understanding of Natural

FTC Official: Research Needed to Study Consumer Understanding of Natural

<p>During an event held in Las Vegas by the Natural Products Association, Richard Cleland cited the challenges surrounding the term natural facing the courts and regulators.</p>

In November 2015, FDA announced a proceeding to solicit comments on use of the term “natural" in the labeling of human foods.

FDA invited comments on various questions, including whether to “establish a meaningful definition for ‘natural’ so that this term would have a common consumer understanding, and whether it should prohibit ‘natural’ claims entirely on the grounds that they are false or misleading."

FDA’s proceeding wasn’t entirely unexpected. The term “natural" on food labels has been the subject of citizen petitions filed with FDA and the target of class action litigation in recent years, prompting requests from federal judges that FDA determine whether genetically engineered foods may be labeled as “natural," “all natural," or “100% natural."

But what is the FTC—the agency responsible for cracking down on deceptive and unfair business practices—doing about natural claims in the market?

In April 2016, FTC announced four companies marketing skin care products, shampoos and sunscreens online agreed to settle charges against them. According to the agency, the companies falsely claimed their products were “all natural" or “100% natural" even though they contained synthetic ingredients.

“‘All natural’ or ‘100 percent natural’ means just that—no artificial ingredients or chemicals," Jessica Rich, then director of FTC’s Bureau of Consumer Protection, said in a statement at the time. “Companies should take a lesson from these cases."

Nine months later, FTC issued a summary judgment decision against a company for falsely advertising its sunscreen product as “all natural" after the company admitted eight percent of its sunscreen formula is a synthetic ingredient.

Despite the enforcement actions above, the number of class action lawsuits involving the term natural appears to far outweigh related FTC activity. According to a report by the law firm Perkins Coie LLP, in 2015 alone, 53 class action lawsuits were filed targeting products or ingredients labeled as “natural" or “all natural."

During The Big Natural, an event held in Las Vegas by the Natural Products Association (NPA), FTC official Richard Cleland cited the challenges surrounding the term natural facing the courts and regulators.

“The courts themselves are really struggling with that term right now in the context of private litigation," said Cleland, who explained his agency has publicly acknowledged it doesn’t have sufficient “information to really know or understand how consumers interpret the word natural.

“What’s needed in this area, and we’re looking at different ways to get there, is … better consumer research," divulged Cleland, assistant director of the Division of Advertising Practices with FTC’s Bureau of Consumer Protection.

Cleland indicated the research must focus on what the term natural “means to consumers, and what it might mean to regulators.

“I think it’s fundamentally a different question than things like low-calorie or some of those terms that FDA has defined before because I think this is a consumer understanding issue," he said.

Asked whether his agency is conducting its own consumer research to help define the term, Cleland responded, “All of the options are on the table…All I can say is this is an issue … that we are actively looking at right now."

Part of the conundrum facing regulators, he explained, is the “natural" issue isn’t confined to one category of products like dietary supplements.

“You have different kinds of products that make natural claims," Cleland said, “and the consumer understanding of the word natural may depend on what kind of product is being attached to" the term.

Mark LeDoux, founder, chairman and CEO of Natural Alternatives International Inc., who moderated a Q&A with Cleland during the event, suggested the industry would react positively to any help from regulators in clarifying the definition of the term natural.

Cleland responded, in part, “I think again it’s something that we are giving some thought to."

LeDoux, chair of NPA’s board of directors, recommended the industry and FTC continue the dialogue on the issue.

To the extent the “natural" topic impacts NPA and the core group of members who attended the event, Cleland suggested the industry consider formally requesting that FTC examine the issue.

But Charles Sipos, a partner in Seattle with Perkins Coie who has defended a number of class action lawsuits involving the term natural, told INSIDER he doesn’t believe FTC’s examination of the issue is warranted.

“I think at this stage, that … isn’t really necessary or appropriate because the FDA has already acted," he said, referencing FDA’s 2015 Federal Register notice.

Finally, Sipos argued FTC’s nominal interest in the “natural" issue thus far reflects “the fact that even as to natural claims that have been challenged in an ongoing litigation, there’s just not much quality of proof there that consumers are being misled by these claims."

Naturally, plaintiffs’ lawyers who have sued conventional food and dietary supplement companies for misleading claims disagree. And until regulators provide additional clarity around what “natural" actually means, the ambiguity surrounding the term, and the legal headaches facing the natural products industry, are likely to endure.

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