FTC Rules Against California Brand In ‘All Natural’ Sunscreen Claims Case

Leading up to the FTC’s final order prohibiting California Naturel from making deceptive “all natural” claims, the firm said it had stopped selling its All Natural Sunscreen SPF 30 due to negative publicity and viewed continued proceedings in the case a waste of FTC resources. At this point, the company seems to have closed up shop.

Sausalito, Calif.-based California Naturel, Inc. can no longer misrepresent the naturalness of its sunscreen or other products under a final order announced by the Federal Trade Commission Dec. 12.

The company has the option to request an appeal and could have footing to do so, given that one of three voting commissioners dissented in part to FTC’s opinion on the matter.

However, it appears that California Naturel has already thrown in the towel. The company – which launched in 2013 and consisted of 10 or less employees, according to LinkedIn – has taken down its website and ostensibly ceased social media communications, and attempts by the Rose Sheet to contact the natural skin-care marketer by email and phone came to dead ends.

The FTC announced proposed settlements in April with four skin-care marketers for deceptive “all natural” and/or “100% natural” claims, noting at the time that it also was pursuing a complaint against California Naturel. (Also see "FTC Settles With Personal-Care Players In 'All Natural' Claims Crackdown" - HBW Insight, 12 Apr, 2016.)

The crackdown was seen as an effort to put industry on notice about absolute natural assertions. While the initiative fell short of defining “natural,” the takeaway was that personal-care products made with synthetic ingredients cannot be marketed as completely natural without potentially misleading consumers and risking FTC enforcement action.

California Naturel President John Bernard Duler questioned in May the need for continued action against the company in light of the changes it had implemented and its relatively minute commercial impact, noting that the brand had sold 10 tubes of its sunscreen during the January 2016-April 2016 period.

In the months that followed, California Naturel filed documents with the chief administrative law judge presiding over its case, addressing key points in the FTC’s complaint in May and then seeking dismissal of the agency’s motion for summary judgment in September.

According to the company, it had added a disclaimer to its website clarifying that “dimethicone, a synthetic ingredient, is 8% of the sunscreen formula; the remaining 92% are natural products,” based on an FTC-requested lab report it obtained to specify the exact percentage of the non-natural component.

California Naturel also listed the ingredients in the challenged sunscreen product at the bottom of the webpage on which it appeared, identifying zinc oxide as the sole active ingredient and including links for other ingredients that routed to pages providing further detail. For example, dimethicone was characterized on one such page as “a silicone-based polymer … used as a skin protectant.”

Finally, the company said it had placed a brightly colored sticker on its sunscreen packaging alerting consumers to the presence of dimethicone in the otherwise natural sunscreen offering.

In the May letter, California Naturel President John Bernard Duler questioned the need for continued action against the company in light of its relatively small commercial impact. According to the exec, the brand had sold 10 tubes of its sunscreen during the January 2016-April 2016 period.

“Yes, you have read correctly that we generated $350 in gross revenues for the sale of our SPF 30 sunscreen. Those 10 tubes of sunscreen have been sold to seven happy customers. I don’t think any of them were harmed in any way, and all of them praise our ingredients disclosure and transparency,” he said.

If there were any doubt as to whether the product met with purchasers’ satisfaction, he suggested that FTC simply reach out to the seven individuals.

Duler added: “I am appaled [sic] to see the FTC investing valuable resources on such a small case. The number of people involved, the communities, the size of the lawsuit lead me to believe that a considerable amount of energy was wasted in this case.”

In the September letter opposing FTC’s motion for summary judgment, Duler said the company had stopped selling the sunscreen due to negative publicity resulting from the “false FTC allegations” and that the referenced website was no longer live.

“To this day we challenge the foundation of this complaint and view that as a waste of valuable and scarce resources at the FTC,” he said, contending that a summary decision “makes no sense” and “totally disregards” California Naturel’s previous arguments.

FTC Opinion Oversteps?

The All Natural Sunscreen marketer’s attempt to derail a summary judgment failed, and in her opinion released in conjunction with the final order, FTC Chairwoman Edith Ramirez suggests that the case was actually fairly cut and dried, calling the facts in the matter “simple and undisputed.”

California Naturel initially promoted its SPF 30 product as containing “only the purest, most luxurious and effective ingredients found in nature,” but did not deny in exchanges with FTC that the formula includes dimethicone, a synthetic, she notes.

According to FTC’s release, “the Commission was not persuaded by the company’s argument that its ingredient list and a disclaimer recently added to the company’s webpage cured its misleading advertising, noting that consumers should not have to search for and dig out information that contradicts what an advertisement expressly and prominently conveys.”

For example, FTC says, the “all natural” claims were prominently featured on the company’s sunscreen webpage, but the related disclaimer was located at the bottom of the page, so that it could not be viewed without scrolling down, “well below the ‘Add to Cart’ button.”

The FTC vote approving the final opinion and final order was unanimous, 3-0. However, Commissioner Maureen Ohlhausen dissented in part to the opinion as rendered.

Ohlhausen agreed that California Naturel’s addition of a disclaimer to its website does not excuse deception that already occurred, making a summary judgment and remedial order appropriate.

But she suggests that the legal standard for summary judgment “requires us to resolve all factual ambiguities and draw all justifiable inferences in the light most favorable to California Naturel, the party opposing the motion,” and that the effect of the company’s later-added disclaimer and product stickers, in terms of their clear and conspicuous adequacy, should not fall within the scope of a summary decision.

In other words, “that issue was not properly before the Commission.”

“Some courts have granted summary judgment in matters where disclaimers were in fine print and distant from the challenged claims,” Ohlhausen says. “But other courts have denied summary judgment where there is a genuinely disputed factual issue about whether disclaimers are prominent and easily visible.”

Under the final order, California Naturel is barred from misrepresenting products as “all natural” or misleading consumers as to the health or environmental benefits of such a product. Further, the company must have competent and reliable evidence to support its claims going forward.

FTC notes that California Naturel has 60 days from the final order’s issuance to petition for appellate court review.

At the very least, an appeal potentially could be helpful to California Naturel from a PR perspective, particularly if it ultimately cast the company’s disclaimer and other corrective measures in a more favorable light.

However, with the company’s listed phone number and email addresses out of service, and its most recent social media posts in some cases over a year old, it may be that the damage has already been done.