With false advertising lawsuits on the rise, brands risk long-term harm to their image

This article was first reported on, and published by, Digiday sibling ModernRetail.

For the past month, allegations involving hair loss and other side effects have engulfed the luxury hair care brand Olaplex. 

Olaplex is being sued after 30 women filed a lawsuit on Feb. 9, claiming the company’s products contain allergens and irritants that have resulted in brittle hair and hair loss. Olaplex’s image troubles come at the heels of the company’s declining streak since going public in 2021.

The subsequent social media fallout prompted Olaplex CEO JuE Wong to address the allegations in a video message last week, saying the claims are “baseless” and that Olaplex is “prepared to vigorously defend” the brand. Wong added that the company has publicly released test results from independent third-party laboratories debunking claims that Olaplex products cause hair damage. 

The Olaplex case is part of a growing trend of customers taking legal action against what they allege is false advertising or misleading marketing. Other allegations are more benign, sometimes taking issue with where products are produced and how that’s reflected in marketing campaigns. This was recently the case for Barilla and Godiva, whose false “European-made” branding irritated some customers. While companies can put these legal issues behind them with settlements, they can also tarnish the reputation — and, at the very least, immediate sales — of more vulnerable brands. And social media has become the hotbed for many of these backlash campaigns to go viral.

Some of the lawsuits center around issues consumers take up with luxury or better-for-you brands when those products allegedly don’t live up to the hype, or when there is concern over serious side effects. The Olaplex lawsuit alleges negligence, false advertising and the use of lilial, a chemical compound the European Union banned in March 2022. A federal lawsuit was filed against Unilever, after one of its brands, the Laundress, recalled a large swath of products after elevated levels of bacteria called pseudomonas were detected. “Despite defendant’s widespread marketing campaign that the products are non-toxic and present better-for-you alternatives to other cleaners, the products contain highly toxic, undisclosed ingredients,” the suit said.

Food and beverage brands, in particular, have had a rough time with increasingly label-conscious customers. 

In December, Anheuser-Busch settled a class action lawsuit in which more than two dozen buyers complained that AB’s line of canned Rita drinks don’t contain actual spirits. For instance, Bud Light Lime-A-Rita mimics the look and taste of margaritas, but is made with malt liquor instead of tequila. Aside from reimbursing the plaintiffs, Anheuser-Busch will begin printing a “malt beverage” label on Rita cans. 

Fireball is currently facing a similar lawsuit, specifically regarding its mini Fireball Cinnamon bottles, which retail for about a dollar each. Per Fireball’s website, Fireball Cinnamon products are “malt-based and wine-based alcoholic beverages,” allowing them to be sold in wine and beer shops. 

But according to a class action lawsuit filed against parent company Sazerac Company in January, the mini bottles’ branding misleads customers into thinking they contain the same whiskey found in standard-sized Fireball. Many social media users poked fun at the news that people had been drinking what, allegedly, amounted to cinnamon water. 

Aron Solomon, chief legal analyst for marketing agency Esquire Digital, said that in recent years people have become more confident calling out brands, and can easily take to social media to do it publicly.

Indeed, social media helps quickly ignite a news cycle that criticizes the companies at the center of these controversies. With daily bombardment of ads, the possibilities of customers catching onto a misleading claim and going public with it is heightened.

While false advertising lawsuits have been around for decades, Solomon said customers are also increasingly more aware of brands’ slick marketing tactics. “Consumers, consumer groups and consumer advocacy organizations are holding brands to both the spirit and letter of what they claim,” Solomon explained, predicting more of these lawsuits are to come. 

In some niche cases, plaintiffs go as far as to complain about brands lying about or obscuring where their products are actually made. One recent example included two customers — who spent a combined $6 on Barilla pasta — claiming they were duped by the company’s “made in Italy” claims. The lawsuit is similar to one fought by Godiva last year, claiming the chocolate maker’s “made in Belgium” ads are deceptive given that they’re produced in Pennsylvania; A court approved a $15 million settlement in November.

The Barilla lawsuit filing claims that shoppers are likely to pay more for a European-manufactured product; The majority of the Barilla pasta sold in the U.S. today are currently made in New York and Iowa. Thus far, District Court for the Northern District of California agrees with plaintiffs that Barilla’s “Italy’s #1 pasta” tagline and the Italian flag-stamped boxes insinuate a connection to Italy. A decision on the lawsuit hasn’t been made yet. 

Given the globalization of supply chains, Solomon said the Barilla marketing allegations can be complicated to assess. “From a legal perspective there are some designations where, if brands lie about it, they can get in trouble,” he said. This is the case with products donning highly-regulated labels, such as “Swiss made” watches — a stamp protected under Swiss and international laws and treaties — or certified organic stamps on food and beverages. French-produced Champagne is one such category. Pasta production, on the other hand, doesn’t have legal label protections at the moment.

“It’s important to point out that brands always understand where the line is between exaggeration and lying,” Solomon said, given the potential of legal liability attached. “These days, it seems like they’re pushing closer to that line.”

While it’s hard to predict the long-term repercussions these accused companies will face, the immediate hit can be a public relations nightmare.

Deborah Etienne, data analyst and researcher at Brandwatch, said that the lawsuit news also sparked debates about Olaplex products across social media, including TikTok and Instagram. But it’s worth noting that not all reactions were negative, with some people even expressing their positive experience with the hair products. 

Over the past month, there were more than 11,000 online mentions of Olaplex, with the #olaplex receiving over three million impressions. According to Brandwatch data, day-to-day conversation spiked to more than 1,500 mentions on Feb. 16 — attributed to Olaplex’s lawsuit and the resulting media coverage. The court has not set a date for the trial, but in a statement, Olaplex said it plans to fight the lawsuit in court.

“When examining the sentiment of the Olaplex online discussion, 69.51% of mentions are negative and 30.48% of mentions are positive,” she said. It’s important to note that some negative mentions were not necessarily geared toward the brand but instead toward users who were dubbed negligent in their use of Olaplex products. Some posts even argued that the Olaplex formula, originally created for professional salons, should not have been launched in a retail version. 

Even for brands with a loyal and dedicated following, a negative lawsuit can sully its reputation. 

“Apart from tarnishing a brand’s image, lawsuits can negatively affect the perception of current and prospective customers resulting in hesitant client approaches and a decreased consumer base,” Etienne said. “Resolving these issues also comes with enormous costs for organizations.” 

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