The simple truth: How label claims can get you into trouble

This story first appeared at Shelton Insights and is reprinted with permission.

Back in October, the FTC issued a press release announcing six new enforcement actions related to the revised Green Guides. All six had to do with what were deemed "deceptive biodegradable plastics claims." But because the revised Green Guides still don't address claims such as "all natural," there hasn't been much regulatory action on green food claims.

This gap in consumer protection is, however, being addressed through litigation. You might remember last year when Pepsico was sued for using the term "all natural" and for various health claims noted on Naked Juice products. This class action lawsuit was filed on behalf of a Texas resident and eventually cost Pepsico some $9 million.

Unsubstantiated claims lead to legal complaints

And now we have Anna Ortega. Back in February, Ortega, represented by the activist group Compassion over Killing, alleged in a class action complaint filed in California that Kroger deceived consumers with its Simple Truth chicken product labels. Specifically, the complaint states that Simple Truth products are marketed as humanely raised chicken, including the claim of "cage free," when the chickens actually were raised under standard commercial practices.

Contention over green claims is going well beyond FTC or FDA guidelines, and even beyond nebulous, unregulated words such as "natural." Brands should be aware that almost any unsubstantiated claim could spark a lawsuit.

Both interest groups and private citizens are stepping in to fight against misleading labels. They aren't waiting for the government to get around to taking action. If companies make a sustainable claim that isn't verifiable (or is plain misleading), someone eventually will bring it to their attention.

This case makes it clear that companies have to look beyond the FTC Green Guides and consider the views of relevant interest groups when making claims.

Disingenuous, deceptive, damaging

Shelton Group's 2013 Eco Pulse study shows that the percentage of Americans searching for greener food alternatives is growing faster than in all other product categories. We are becoming a health-crazed society. While the food labeling emphasis historically has been on ingredients, ancillary issues, such as whether poultry is humanely raised, is becoming more important to consumers as well. If you are a meat producer or retailer, you must develop labeling content with the views and concerns of animal rights activists and pro-vegan groups in mind.

A Kroger spokesperson said that the label reflects what it believes is accurate and that it intends to fight the lawsuit. While the spokesperson may have been selecting words carefully, believing is not necessarily knowing. Companies must be certain that their label claims are absolutely accurate. And even that is not enough. They can't claim (as a benefit) a standard practice.

It's becoming increasingly important for companies to rely upon qualified third-party certifiers to verify and validate practices and product claims. Admittedly, this contradicts previous Shelton posts questioning the value of these labels for mass market products. We've noted that less than 25 percent of consumers care about certifications, and even fewer recognize many of them. But times are changing and the use of third-party certification as a tool for risk reduction, rather than for product differentiation/consumer preference, makes great sense.

If the court finds that what has been alleged by Ortega is true, then Kroger has deceived consumers. And even if Kroger did it unintentionally, it still will cost the company. It's that simple.

Chicken image by Holly Occhipinti via Flickr.