United States: Sephora Prevails In Consumer Challenge Of "Clean At Sephora" Claims

On 15 March, a New York federal court rendered a big win¹, not just for Sephora, but for personal care brands and retailers that want to make "clean" claims. As the personal care industry has increasingly embraced the term "clean" to market products in response to rising consumer demand, so too have consumer lawyers sought to challenge the industry's use of this marketing claim. What does "clean" mean? In the absence of a legal or regulatory definition, consumer lawyers stepped into the void to advance their own definition of the term in several lawsuits brought against Sephora, Ulta, and others. In an important decision for industry, the first court to rule found in favor of Sephora and dismissed the lawsuit brought against it. It found that a reasonable consumer would not interpret cosmetics labeled "clean" to mean they are free of all synthetic or harmful ingredients when the marketer had specifically defined "clean" to mean the cosmetics were free from a narrow list of ingredients.

Class Action Claims Against Sephora

The case arose when Lindsay Finster filed an action, on behalf of a putative class of purchasers, alleging that Sephora misled her by marketing cosmetics under its "Clean at Sephora" label. Sephora defines its "clean" claim to mean the products comply with Sephora's specific and clearly defined criteria to promote transparency in formulation and sourcing, including that the products are "formulated without parabens, sulfates SLS and SLES, phthalates, mineral oil, formaldehyde[,]" and other listed ingredients. Yet the definition Finster sought to advance would have established a much stricter standard of "clean." Finster brought a variety of claims that were all essentially predicated on the same underlying theory: Sephora's marketing was deceptive, and Finster reasonably relied on it to believe that Sephora's "clean" cosmetics did not contain any synthetic or harmful ingredients.

Sephora's Motion to Dismiss

Sephora moved to dismiss the claims on the grounds that the definition of "clean" that Finster sought to impose differed from the one Sephora communicated to consumers. Specifically, Finster alleged that Sephora's "clean" claims were false and deceptive because the products were not free of all synthetic or harmful ingredients. As Sephora noted, however, its advertising expressly reveals that its "clean" products are formulated without specific ingredients that are known or suspected to be potentially harmful; Sephora did not advertise such products as being free of all synthetic or harmful ingredients. The court dismissed Finster's claim, noting that it was unclear how a reasonable consumer could mistake Sephora's marketing to mean that the cosmetics contain no synthetic or harmful ingredients whatsoever in spite of Sephora's stated, and limited, definition of the term "clean."

Finster's related claims for consumer protection, breach of warranty, fraud, and unjust enrichment also failed. The court dismissed some of these claims because Finster did not plead the specific laws she was invoking or give sufficient notice of her claims. But in findings that reinforce Sephora's win, the court dismissed Finster's fraud and unjust enrichment claims because it found no materially false statement, noting that Sephora's marketing materials did not say the products were free of all synthetic or harmful ingredients.

Key Takeaways From Dismissal of Sephora's "Clean" Litigation

Although the court granted Finster leave to amend her complaint to try to allege more facts to support her claims, the decision offers important lessons, regardless of what happens next. Under the broadly applied legal standard, a "claim" means what a consumer, acting reasonably under the circumstances, expects the claim to mean. But this decision reaffirms that there are limits to how much consumer expectations can control a definition, so long as brands and retailers clearly define marketing claims that would otherwise be ambiguous.

The Finster ruling is consistent with a recent decision from the National Advertising Division (NAD) of BBB National Programs about "clean" claims made by Amyris Clean Beauty (Amyris). NAD took it upon itself to challenge Amyris' clean claims, but it then found them to be viable with a modification to the disclaimer. NAD noted that "clean" is an undefined term widely used in many different product categories; therefore, the context in which it is used dictates its meaning. Amyris qualifies its "clean ingredients and clean formulas" claim with a disclosure that states, "we ban over 2,000 ingredients that are known to be toxic to you and the environment." Amyris' disclosure is based on various lists of substances that regulatory bodies, countries, and trade associations have deemed to be toxic to human health or the environment, but NAD found that it is not clear all those ingredients are commonly used in cosmetics. NAD drew on principles from the European Union's regulatory regime and the Green Guides of the Federal Trade Commission, noting that "a truthful claim that a product, package or service is free of, or does not contain or use, a substance may nevertheless be deceptive if the substance has not been associated with the product category." Thus, NAD recommended that Amyris update its disclosure to specifically identify the ingredients it does not use that are typically associated with cosmetics, but it recognized that clearly stated clean claims are available to marketers. In short, defining specifically what "clean" means by clearly identifying ingredients not used or other criteria seems to satisfy regulators and courts.

Not only do NAD's and the Finster court's rulings show brands and retailers how they can mitigate the risk of using "clean" claims, but they also provide guidance for using other popular, but unregulated or ill-defined, claims, such as "sustainable," "microbiome-friendly," or "natural." There is plenty of litigation and forthcoming regulation around these claims as well, and there promises to be more. Companies that market using otherwise arguably ambiguous claims can broadly learn from the ruling in Finster and the NAD's Amyris decision by making narrow, specific, and well-substantiated claims.

Footnotes

1 Finster v. Sephora USA Inc., 2024 WL 1142014 (N.D.N.Y. March 15, 2024).

2 Amyris Clean Beauty, Inc. (Biossance) NAD/CARU Case Report No. 7132 (March 2024).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.