The ‘Organic’ Personal-Care Quandary: Regulators May Lack Essentials To Act

The need for stronger federal oversight over the “organic” personal care segment has been somewhat lost in recent years amid clamoring for action on “natural” claims, but organic deception is still a problem, stakeholders say. However, neither USDA nor the FTC seems entirely equipped or ready to commit to increased involvement, based on discussion at a recent roundtable they held in Washington.

Consensus among regulators, industry groups and consumer advocates seems to be that “organic” claims on non-food products, such as cosmetics, are a source of confusion in the marketplace, but solving the problem is a thornier matter which may lack a ready solution.

The Federal Trade Commission and US Department of Agriculture held a roundtable Oct. 20 in Washington to discuss consumer perceptions of non-agricultural organic claims, which generally fall outside the scope of the National Organic Program, housed within the latter’s Agriculture Marketing Service.

Panelists included the Organic Trade Association’s Angela Jagiello, associate director of conference and product development, the Environmental Working Group’s Scott Faber, executive vice president for government affairs, and Consumer Reports’ Laura MacCleery, vice president for consumer policy and mobilization, among others.

Under current regulations, “why wouldn’t a marketing officer for a company freeride on all of the enormous consumer trust that has been built by organic companies and the USDA National Organic Program? One could argue you’re sort of crazy not to.” – Scott Faber, EVP for government affairs at EWG

Central to discussion were results from an FTC/USDA survey of 8,000 consumers, conducted in early 2015, which yielded a report published in August 2016.

Key findings from the study, which used an “organic” shampoo, mattress and dry cleaning service as the example offerings by which consumers’ organic views were extracted, included:

• Respondents were roughly split between those who equate organic claims on food products with those on non-food items, with 41% specifically indicating their belief that organic for shampoo means the same as organic for an apple.
• Approximately 31% of consumers felt that an organic claim for shampoo meant that it had no or fewer chemicals;
• Around 35% of respondents believed that organic claims for shampoos or mattresses imply that the product meets some government standard;
• Roughly 30% believed that the USDA certifies organic claims for those products;
• A significant minority of respondents disagreed that “organic” accurately described a product with a small percentage of materials derived from a “man-made, chemical process”;
• Qualifying an organic claim on shampoo by limiting it to the product’s cleansing ingredients resulted in a drop in the percentage of respondents who identified the product as all organic (from 52% to 22%).

The agencies note study limitations, including the fact that it did not test the term “USDA Organic,” which could command different interpretations among consumers.

However, they found the results to be “sufficiently robust to consider these organic issues further.”

Current Regulatory Approach Leaves Void

Per the Organic Foods Production Act, USDA oversees use of labeling claims for “organic” food products under the NOP.

While cosmetics containing agricultural ingredients can be certified to NOP criteria and bear the USDA Organic seal, USDA does not have authority over the personal-care sector or any claims that do not reference it or the NOP, meaning that companies are free to certify cosmetic products to private organic standards, which vary widely in their requirements, and market their products accordingly.

The situation has given rise to confusion and outright organic fraud, according to stakeholders who view the NOP as the gold standard, if not the only reliable framework for organic certification.

“You have all of these groups competing in the public eye to claim that they are the only, or the best, or the most meaningful organic standard,” MacCleery noted during the roundtable. “Some of these schemes are pay-to-play, and some are limited to certain aspects of organic production or certain ingredients. Those kinds of variations and what they mean are just not going to be clear to consumers.”

California has taken action to curb abuses under its Organic Products Act of 2003, requiring cosmetic products sold in the state to contain at least 70% organic content (minus water and salt) if they are marketed as “organic” or “made with organic.” (Also see "Hain Celestial To Pay $7.5M Under Proposed 'Organic' Class-Action Settlement" - HBW Insight, 25 Sep, 2015.)

“What I want to emphasize is that when we look at what an ad reasonably conveys, we look not to a scientific or technical or regulatory definition, but again, to what reasonable consumers think this claim means. So there could very well be a disconnect.” – FTC’s Laura Koss, assistant director

Retailers also have stepped in to fill what they view as a federal regulatory void. Whole Foods introduced a policy for body-care products in 2010 that requires those bearing organic labeling claims to be USDA-certified or certified to NSF International’s NSF/ANSI 305 standard. (Also see "New Whole Foods Policy Requires USDA Certification For Organic Body Care" - HBW Insight, 14 Jun, 2010.)

Long-time crusader for organic integrity Dr. Bronner’s Magic Soaps has said that while the Whole Foods requirements addressed the worst instances of organic deception in the personal-care marketplace, problems still exist that only USDA can address.

Bronner’s resigned itself to that reality after battling unsuccessfully in the federal courts for years in an effort to bring organic offenders to justice. (Also see "Dr. Bronner’s V. USDA? Firm Meets With Agency On “Organic” To Avoid Suit" - HBW Insight, 22 Oct, 2012.)

Meanwhile, the organic cosmetics segment continues to grow. According to EWG, 5,000 of the 25,000 formulations in its Skin Deep Cosmetics Database are linked to some sort of organic claim in the brand or product name or on the front or back of the package.

OTA estimates that non-food items currently account for $3.5bn, or approximately 13%, of the $43.3bn organic products industry.

EWG’s Faber said that figure could grow to reach $20bn within the new few years.

“The organic industry is the fastest-growing segment of the grocery store,” he pointed out, adding: “The growth of non-food organic has really exploded over the last decade.”

Why Not Claim Organic?

OTA has conducted its own research on consumers’ organic claim perceptions. In its survey, 60% of participants believed that non-food products touted as organic were certified as such by USDA.

“What consumers have told us is when they see the word ‘organic,’ they expect it to mean a certain thing – for a product to have met a reasonable certification expectation,” Jagiello said.

Consumer Reports’ MacCleery agreed: “Consumers have a sense that [organic] is a meaningful term and that it’s regulated,” she said. According to her, organic claims are interpreted by consumers as meaning that the associated product is “all or virtually 100% made of organic ingredients.”

When asked whether the problem is predominantly one of bad actors, panelists emphasized that it’s not that simple.

“Sometimes they’re just taking advantage of the fact that there’s not clarity around a term,” MacCleery said. “You can’t attribute it to nefarious motives – if people have a profit incentive to sell products, they will take advantage where they think they can make an appeal that isn’t going to get them in hot water.”

Faber expressed a similar view, pointing to a product on hand that served as an example of questionable organic marketing. “If I were general counsel for the company that produced this product, I’d probably say this is fine, this is a perfectly legal claim to make.”

He noted that there’s “no real litigation risk” in making organic stretches, or aspirational organic claims, which differs from the situation facing “natural” marketers. (Also see "Nervous About ‘Natural’? Honest Company Heads For Organic Pastures" - HBW Insight, 11 Jul, 2016.)

The relative lack of consumer class actions against purported organic brands may actually reflect greater confusion in the marketplace around the meaning of organic compared with natural, making it more difficult for plaintiffs to build cases and courts to competently hear them out.

“So why not, why wouldn’t a marketing officer for a company like this one freeride on all of the enormous consumer trust that has been built by organic companies and the USDA National Organic Program?” Faber asked. “One could argue you’re sort of crazy not to.”

Regulatory Initiative Needed, But Who Will Step Up?

Panelists generally agreed that increased oversight and, in particular, guidance from USDA or FTC would be useful to help clean up the organic personal-care space and others beyond the NOP’s formal scope.

However, those agencies may not be positioned to plug the gaps identified in the current oversight structure, at least not without additional resources and/or information.

“We don’t currently have on our work agenda changes to the regulation in response to personal-care products,” USDA’s Brines said, adding, “Again, the scope of our authority under OFPA is agricultural materials.”

Lisa Brines, agricultural marketing specialist at USDA, emphasized that the NOP derives its authority from the OFPA. Its focus on organic standards “from farm to market” puts food production issues squarely in its sights, rendering personal care a peripheral concern at best.

Stakeholders working to reform “natural” marketing recognize USDA’s limitations when it comes to personal-care matters, identifying FDA as the agency best suited to take on natural regulation (Also see "New Nonprofit NAC Seeks ‘Natural’ Legislation, Data-Sharing Forum" - HBW Insight, 24 Oct, 2016.)

FDA in turn notes on its website that neither the Federal Food, Drug and Cosmetic Act nor the Fair Packaging and Labeling Act – or any regulations the agency enforces under their authority – defines “organic” as it applies to cosmetic products. It defers to USDA on organic labeling issues.

Brines said changes in NOP regulations – which would be required at minimum to officially fold in cosmetic products, if not amendment of the overarching statute – generally stem from recommendations made by its National Organic Standards Board.

“We do have a long list of outstanding recommendations from that board that we’re trying to implement – everything from aquaculture standards to pet food to livestock regulation changes,” she noted.

“We don’t currently have on our work agenda changes to the regulation in response to personal-care products,” she said, adding, “Again, the scope of our authority under OFPA is agricultural materials.”

FTC may be better equipped to take action on the organic personal-care front, similar to what it’s done of late in the area of misleading “natural” personal-care claims. (Also see "FTC Finalizes ‘All-Natural’ Personal-Care Settlements, Offers A Word On ‘Natural’" - HBW Insight, 13 Jul, 2016.)

However, again, the situation may be more complicated for organic. Laura Koss, assistant director of the agency’s enforcement division, explained the standard that FTC uses when going after deceptive claims, which is based on the agency’s understanding of “reasonable consumer” expectations.

“What I want to emphasize is that when we look at what an ad reasonably conveys, we look not to a scientific or technical or regulatory definition, but again, to what reasonable consumers think this claim means,” she said.

“So there could very well be a disconnect between a regulatory standard or what the dictionary says, between what a scientist, expert or what the industry says [organic] means, and what reasonable consumers think it means.”

She noted that FTC revised its “Green Guides” for environmental marketing claims most recently in 2012. (Also see "FTC Final Revised Green Guides Tackle Certification Disclosures" - HBW Insight, 8 Oct, 2012.) Over the course of periodic updates and associated comment periods the agency has solicited evidence on how reasonable consumers interpret organic claims.

“We didn’t receive that evidence unfortunately,” so the agency elected not to include a designated section for organic in the guidance, Koss said. She stressed, however, that organic assertions are still subject to general requirements for truthful and accurate claims under the FTC Act.

It’s not clear whether the updated consumer perception evidence supplied by the recently published FTC/USDA study has solidified in the agency’s view what consumers expect from products positioned as organic, which would enable it to furnish specific guidance on the subject.

Stakeholders Invited To Be Agencies’ ‘Eyes And Ears’

Panelists were optimistic that the study and roundtable would lead to continued FTC/USDA collaboration and a guidance document, but the agency officials were careful not to make any promises.

Koss underscored the importance of additional research to pin down exactly what consumers expect from organic products and why they’re willing to pay premiums for such offerings. “In other words, [we’re] trying to get at the implied claims consumers are seeing, what features of organic are material to them.”

She added, “What we’re trying to do is bolster a very strong record. We don’t issue guidance unless we feel that we have that.”

Both Koss and Brines encouraged stakeholders to report instances of organic deception to the agencies, which can then sort out issues of enforcement authority and take action as deemed appropriate.

“You can be our eyes and ears, so to the extent that you become aware of deceptive claims in this area, please let us know,” Koss said.