The Startup CPG Podcast

Lauren Handel
So natural and all natural, 100% natural, was the biggest area of food labeling litigation initially, like 10 to 15 years ago. Like, when food labeling litigation started to become hot, it was primarily focused on natural labeling. And as a consequence of that, a lot of brands stopped saying that or found different ways to try to say the same thing. So it remains a risky area, but there are kind of different versions of it now that gain more attention.

00:49
Daniel Scharff
Welcome to the startup CPG podcast. One of the most common questions in our 30,000 person Slack group is around labeling for CPG products. What are the rules? What are the big things that can get me into trouble? So we've got a total pro on today who I've worked with a lot personally. It's Lauren Handel from Handel Food Law. She's about to break it all down for us with a great overview. And then we're going to rapid fire through a bunch of specific claims and areas where there's a lot of litigation happening right now that brands should know about. All right, here we go. I hope you all learn a lot. Welcome everyone, to the podcast. I am so excited. We've got Lauren Handel here, and Lauren is just one of the most knowledgeable people out there on food labeling.

01:33
Daniel Scharff
You know the labels that you put on your product. And this is one of the questions we get every day in the Slack, can someone review my label for X, Y and Z? Or can someone tell me, like, hey, can I just say the product is natural? What are the rules around that? And so there's a lot of curiosity out there. And then there are also a lot of people who get very nasty gram type letters from lawyers representing consumers out there saying, hey, this small thing happened on your packaging. And don't you know, now you owe me hundreds of thousands of dollars, even though you're a tiny brand.

02:06
Daniel Scharff
So this is one of my favorite kinds of podcasts to do, because the same thing like last time I did a podcast with you, Laura, and I said, look, these legal things, they're not always the most fun, like juicy things to listen to, but they might be the most important. And I really mean that because I've been in this situation. Lauren's helped me through some of these situations before, and I really hope it never happens to you, but if it does, you'll be glad to know somebody like Lauren. So, Lauren, do you mind kicking us off with a bit of an intro?

02:37
Lauren Handel
Yeah, sure.

02:38
Lauren Handel
Thanks. So I have a practice called Handel Food Law. It is a very small law practice that is entirely focused on food businesses, food and Beverage that includes supplements. And a lot of what I do is regulatory compliance, most of which does involve labeling and advertising regulation. And that's for purposes of complying with the rules because it's generally a good idea to follow the law, but also because there's a big risk, as you're alluding to, of getting sued if you don't follow those rules. So happy to be here.

03:12
Daniel Scharff
Let's just start out with kind of a philosophical question because you obviously, you know, you fight the good fight, you help so many brands. And you know, and I would say in an accessible way, you know, it's. There are great big law firms out there also. And then, you know, it's. I really like brands to know about you because it's like you obviously have incredibly deep expertise, but they also may not have to worry about things like big corporate overhead when they work, you know, in some instances. So, you know, great for us to have lots of options for the brands in our community. How do you feel, though, about the kind of law that you practice here, especially around things like labels?

03:48
Daniel Scharff
Like, obviously there's the law, but then also do you have personal feelings about like the fairness of all of it and what are really the obligations of a brand and the obligations of consumers and just like, you know, legally and then morally, like where. How do you make sense of all of the stuff that happens out there?

04:05
Lauren Handel
Yeah, good question. So I guess I'd have mixed feelings. I mean, it's a sort of high level, the idea that there are rules of the road around labeling and advertising of food and beverage products. I am wholeheartedly in support of.

04:19
Lauren Handel
Right.

04:19
Lauren Handel
I mean, this comes from a place of consumers can easily be duped. They are all the time. There are snake oil salesmen out there. There always have been.

04:28
Lauren Handel
Right.

04:29
Lauren Handel
And so we have a legitimate interest in having fair ground rules for everyone so that consumers know what they're buying and things are represented, honestly.

04:40
Lauren Handel
Right.

04:40
Lauren Handel
That's kind of the biggest basic driving motivation for a lot of this area of law. And I don't think anybody would really disagree with that. I also, and you know, I, I got into this practice really wanting to support food businesses that are doing the right thing. And by that I mean, you know, that are trying to make truly healthier, more nutritious food in a way that is more sustainable, that treats animals fairly, that's good for the planet. Like all of those things really I'm passionate about. And there are, I love to work with brands that are doing that and they have a legitimate need to distinguish their products from the mass market, commodity, industrial, food system versions of the same sorts of products. And they can get caught up and tripped up in these rules in trying to do that.

05:30
Lauren Handel
Right?

05:30
Lauren Handel
So if you kind of stick your neck out there as saying the things that make your product special, maybe you go a little bit too far if you maybe don't understand the rules or even know that there are rules that apply to what you're trying to say. And unfortunately, those are the kinds of brands that can get targeted for litigation or possibly even regulatory enforcement action because, you know, they find themselves in that. In that situation. And there is, if you're for listeners who are not aware, it is really important to be aware. There's a very aggressive segment of the plaintiff spar, class action, plaintiff spa, that this is their business. And, you know, my feelings about that are I don't like that kind of business right now.

06:15
Lauren Handel
There are some who are doing it for what I consider, you know, good reasons, moral reasons. I call them the true believers.

06:22
Lauren Handel
Right.

06:22
Lauren Handel
There are plaintiff's lawyers out there that are doing it in the public interest, and then there are many that are just doing it to make money and are looking for easy targets, are looking to sue small brands because they can't afford to defend themselves and so that they can extract settlement values that comparatively are on the small end, but for a small brand are significant amounts of money. And, you know, that's just the unfortunate reality of the industry.

06:50
Daniel Scharff
Well, that's very thoughtful and I totally agree with you. And I feel like sometimes it's just like you want to just lump all of those, you know, ambulance chase or whatever, predatory lawyers into the same bucket. But there are plenty of instances where I'm glad somebody's looking out for the consumer as well. Like, I've seen products that don't even disclose it and have an enormous amount of caffeine. And it's products that like, I've seen people buy for their kids and it just doesn't even. It's really not clear at all that there is like two, three cups of coffee worth of caffeine in them. You're like, somebody should do something about that, probably. That's wild. So it is complicated. But yeah, I'm really glad that brands, when that happens, have access to somebody who can help you.

07:30
Daniel Scharff
And yes, I have given you that call when stuff like that has happened before and is a very great feeling of relief to get on the phone with you and then just start talking through it and kind of what the steps are. So one, I think Pretty interesting thing is a lot of people, when they come into our slack, if they have a new idea for a product, they're like, great, hey, I want to launch this food product. Like, who has to tell me that it's okay to do that? And it's pretty interesting because a lot of us were like, oh, like, actually it's not really like that. I mean, so it is. It's a little bit different.

08:03
Daniel Scharff
So could you just start and give us an overview of what kind of products, what kind of regulations are there just out there for people to understand at the onset for different kinds of products? Like what's really required for things that are getting out into market in terms of labeling, advertising.

08:17
Lauren Handel
Okay, in terms of labeling and advertising. So it would be very helpful for people at that stage of I have an idea for a product to get the basic information about what rules apply to things that you'll be able to say or that you can't say in marketing that product. There are, you know, a few. There's basically only one area where you absolutely can't say these things and that's if to represent that products are drugs, which means you might not think you're doing that, but if you want to represent that a product can cure or prevent or treat or mitigate disease or things related to disease, symptoms of disease, that automatically makes the product a drug just by representing it as having those intended uses. And that's illegal.

09:02
Lauren Handel
Right.

09:02
Lauren Handel
So putting that aside, there are permissible and impermissible ways to market the attributes of your product. But it's helpful to know what are those regulated areas. And especially, you know, if your value proposition is in an area where there are clear rules, know what those rules are and have that inform the design rather than the other way around, which is usually what I see happen. People go gung ho, they've got an idea for a product and then come to me, find me. Only when like, hey, we're going to print these labels in a week or two, can you take a quick look at them? And sometimes I find, oh, well, you're making a claim that you actually can't make. And it seems to be the centerpiece of all of your marketing.

09:47
Lauren Handel
So that would have been useful to know at the design stage rather than now when you're all ready to go to market. So, you know, we can talk about what those regulated areas are. And you know, there's a handful of them of areas, types of claims that actually have rules where you can look in the code of federal regulations and find regulations and then there's just sort of everything else where the general rule applies, which is tell the truth, basically don't say anything false or misleading about your product and don't omit facts that would be material to consumers. Right. That's the general prohibition against misbranding. And that involves making sure that you can substantiate factual claims about your products. But there's not a specific regulation that says this is how this claim is defined or these are the criteria for making this claim.

10:41
Lauren Handel
So those are the kind of the two basic categories.

10:44
Daniel Scharff
And so you know, for most food and beverages though, you basically, you pretty much can launch a product into market with, you know, there's not like a government agency that is checking your labeling before you launch it. Right. Obviously buyers are pretty smart about regulations and stuff like that. And I think in most cases, I think to get a coman to make your product you need, you know, a kind of like a process authority type letter that is more around like food safety stuff. Right. But then there are some other kinds of products, I think, where you do actually need kind of an authorization if it's like a, I don't know, certain kinds of supplements, stuff like that.

11:19
Lauren Handel
So if you are making a product that is regulated by fda, so basically all food, except for meat, poultry and egg products and certain kinds of fish which are regulated by usda, if you have an FDA regulated product, there is no pre approval of your labels. I have one caveat to that. But for USDA regulated products, if you are making claims like we're talking about, that label has to be reviewed and approved by usda. So there's a process for submitting that and getting it approved. And as a consequence, you see manufacturers, brand owners following the rules a lot more strictly on those types of products than on FDA regulated products.

12:02
Lauren Handel
My caveat is if you have a dairy product or a product resembling a dairy product, basically dairy alternatives, and you're selling it in California, there is a requirement to have those labels pre approved by the California agency.

12:15
Daniel Scharff
Interesting. Okay, that's super helpful. I never quite knew what that rule was, so that's great to know. Okay, so what are the main risks for people? I know we've hinted at some of the consumer protection action that can come from lawyers out there. But yeah, what are all the things out there that could happen to you if you know you have one of those FDA regulated products? Let's say that some people have a problem with.

12:38
Lauren Handel
Yeah.

12:38
Lauren Handel
So consequences of non compliance could be regulatory enforcement action, which is, as things stand right now, Not a very high risk, to be candid.

12:50
Lauren Handel
Right.

12:50
Lauren Handel
So there are certain kinds of laws that the government cracks down pretty hard and with the exception of those drug claims that I mentioned, where that actually is an enforcement priority for FDA and they do go out and actively look for people making those kinds of claims and take action against them. Most labeling non compliance does not come to the attention of FDA or if it does, they don't take action on it. But it's still a possibility. And it's also a possibility that a state regulator could take action with regard to a labeling non compliance customer problems.

13:25
Lauren Handel
So your buyers, especially larger retailers, are increasingly, I think, focusing on these issues because they can also run into trouble if they're selling a product that is misbranded, that is, that has a labeling violation or that is alleged to be confusing consumers and becomes the subject of litigation. They get brought into these lawsuits all the time, so they're paying more attention to it. You know, for example, Whole Foods I know, is now asking for substantiation of claims related to health benefits. So that's another kind of consequence. It's not a, you know, a fine or something like that, but you might not be able to sell your product to the buyers you want to sell it to if you're not compliant.

14:08
Lauren Handel
If it's an imported product, I should mention there is a greater risk of regulatory action just because it's going through customs, it's crossing the border. And there are FDA agents that inspect a sample of products that come across and if they find label violations, that could be a reason for denying entry of the product. So those categories of risk, and then there's the litigation risk, as I mentioned, there's a very aggressive segment of the plaintiff spar. This is what they do. This is their business. They go out and look for targets. They usually, you know, particular firm will have one or two theories that they're just turning through.

14:49
Lauren Handel
Right.

14:49
Lauren Handel
Maybe they're focused on protein claims and they go out and they look for as many products as they can find that are have messed up, that haven't followed the rules on protein claims. They send out demand letters. Usually is the first step rather than just jumping to suing, but they could just jump to suing. But usually they send out a demand letter first that says, I have a client who's purchased your product and it is deceiving consumers. And my client's going to represent a class of consumers throughout a state, throughout multiple states or nationwide who have purchased this product and who have been deceived by Your label, you know, so respond, change the label. Or, you know, we're willing to talk about resolving this without litigation. And that's basically an invitation to start settlement conversations. And so then the brand owner has a choice.

15:41
Lauren Handel
Do they ignore it? Don't ever recommend that because you could just be sued. And if you really continue to ignore it, you could have a default judgment entered against you. Do you fight it? Are you going to show up in court and defend against this action? And there's a number of considerations in that, but a big one is what is that going to cost? Because even if the plaintiff's case is weak, unless it's really frivolous, like there's just, it's a totally baseless case, which is not usually the situation. You're paying your own defense costs, you're paying for your own attorneys. And these are not the kinds of claims that have insurance coverage. So that is a huge consideration is what is it going to cost to defend? Or option three, we try to settle this and make it go away.

16:29
Lauren Handel
And this is what the plaintiffs lawyers really want, especially when they're targeting smaller brands. You know, they know you're not Kraft, Heinz or Mandalas.

16:38
Lauren Handel
Right.

16:38
Lauren Handel
Like, they know who they're going after is smaller and probably can afford the cost of defense, or they know what it costs to defend. And you know, we're talking about easily, even if it's a case that could be dismissed early, tens of thousands of dollars, 30 to $50,000 just to get through the early stages, and they're willing to settle for that amount or less. And so that's the calculation that you have to go through and consider, is this the kind of thing that's going to multiply if you settle? Usually, you know, if you're settling pre suit before a complaint is filed, you're settling only with one person. And so you don't have complete relief that this isn't going to happen again. And so you have to figure these things out of what's the risk? Is it going to balloon?

17:28
Daniel Scharff
And just to add, like, you know, basically what that means is you can get sued by one. Like some lawyer out there can read about a case that was successful, you know, some high profile thing, and then go and look like, okay, who else is also vulnerable to that? Come and find. You find some consumer on Instagram via an ad who wants to sue you, go and get that money from you, and then you can settle that case with them. You know, hopefully not for as much as they're asking for, but that, yeah. So Basically what Lauren's saying is then like another lawyer can also sue you for that same thing. And that is just kind of a calculated risk you have to take, right. Whether or not you choose to fight it, because you can just, okay, settle that thing.

18:08
Daniel Scharff
If really you actually did something, which probably is true in a lot of cases, then probably you're going to end up making a change to your packaging, which, you know, once that is in flight gives you obviously some protection. But in, yeah, in the meantime, you could have three other people pop up suing you for the same thing. And I don't think lawyers are really in the business of like getting you and then going and telling all their friends to do it too, because that would kind of invalidate their whole approach about trying to get people to settle. And that would get around pretty quickly. But then, but if you're like, well, I'm still susceptible to these other ones, well.

18:40
Daniel Scharff
And you say no to them, well, then, okay, that's where you kind of can open yourself up to write some kind of a, like class action, which at least if you fight it and win it, then that kind of prevents all the other, you know, moles from popping up as well. Right, Right.

18:54
Lauren Handel
Yeah. So at some level, and this is why bigger companies tend to defend, right. At least initially, they don't come to the negotiating table, say, make this go away. You know, they try to make it go away without having to pay anything. And anyhow. And also that's another option sometimes.

19:11
Lauren Handel
Right.

19:12
Lauren Handel
So I had this happen recently with a client that it was seemingly a new plaintiff's lawyer. And the allegations and letters, they were just wrong. They were just completely wrong on the law. And in that case, responding with a letter that said you're wrong and here's why, made them go away. But usually that doesn't work because usually there is something about the complaint that is true enough to be able to get past a motion to dismiss, that if they were to file a complaint, they'd get far enough in the litigation that it will cost you a significant amount of money to continue to defend it. That's the main goal. Doesn't mean they would ultimately win in the end if you got through trial. But is enough.

19:49
Lauren Handel
So when you're in that situation, you have to think about is this going to explode into multiple cases? And at a high level, you know, the big company level, it makes sense to defend and try, even if your goal is to settle on a class wide basis, to make all those other cases go away. But that's expensive.

20:07
Daniel Scharff
Okay. So when I've gone through label reviews with people also, I mean, you know, they can give you the letter of the law and every single thing that's on your packaging. But then there's another dimension, which is about the risk level of each of these things. Be like, okay, technically, actually what your label should have is this, like, laundry list of horror of all these things that would actually be true. But in practice, like, really, this is kind of what's going on. And there are certain areas where there has been a lot of litigation. In these other areas, there really hasn't been. It's much more common. You see that actually on a lot of packaging. So that hasn't been something brands are getting sued about.

20:42
Daniel Scharff
And then, you know, I think brand owners probably make decisions in a lot of cases about what risk they want to take, where they want to take it, what kind of messaging they really believe in that they think is true, you know, all those kind of things. Right. So there is some kind of judgment call there, I think, even when people go through the label review process with an attorney.

21:01
Lauren Handel
Yeah, no, absolutely. And I'm glad you raised this issue, because it's also. It is the difference between the advice you can get from a regulatory consultant and an attorney.

21:10
Lauren Handel
Right.

21:11
Lauren Handel
So following the letter of the regulations, a regulatory consultant who is not an attorney can do a very good job of telling you these are the rules. These are the ways you need to fix your label. You know, and there may be some areas where the rules are a little bit fuzzy and that requires interpretation, and that's kind of stepping into practice of law area. But definitely this sort of assessment of risk, like, what is the risk of non compliance? You know, where do we need to focus on making changes? Or are there ways that we can mitigate the risk through disclosures? You know, there's different things you can do. But yeah, a lot of my clients, again, they need to differentiate their products. Right. This is a legitimate need. It's a highly competitive marketplace.

21:55
Lauren Handel
There is a reason why their products might cost more than the commodity product. They need to explain that to consumers. And we need to find a way that they can do so in a compliant way that mitigates risk as much as possible. And so definitely, I stay on top of what are these litigation trends. But it's also really important to realize that this moves. Like, this isn't a constant target. The things that were hot litigation targets five years ago are not so much anymore. And there's always kind of the new thing. And so this is something that requires Revisiting periodically.

22:32
Lauren Handel
Right.

22:32
Lauren Handel
So if you get your label reviewed today, a year from now, go back and look, has anything changed? Is there some? Was there a decision we made a year ago that now is much more risky?

22:41
Daniel Scharff
Yep. And I've seen it. You know, I think it's just as you see, a lot like we are in the age of new brands forming and becoming very significant in the industry. And then people looking heavily at what they're claiming and them getting sued, and then because that is so dynamic right now, then that means the kind of things people are getting sued for then will follow that and hit pretty hard. So I totally agree with you about just continuing to stay abreast of things. And I also really just agree about. Yeah, you have regulatory consultants who. I've been in this situation where you just send them the label and they come back and they give you the laundry list of the 20 things that are wrong with your label. And I remember that happened one time and I was like, what on earth.

23:23
Daniel Scharff
Like, all this is ludicrous. Like, all this stuff, what is going on? And then only when I was like, can we a call and talk about this? Then they're like, oh, yeah. But like, those 15 things are very low risk. Like, well, why didn't you tell me that? And they can't really, you know, if you think about the job that they're doing, it's really not their. They're not going to be comfortable with doing it. They're not. It's not really their place to I would say, weigh in on all of that stuff. But, you know, I would say, at least for people, just like, understand that. Understand it's really good to get on and actually talk through stuff and really ask a lot of questions.

23:55
Daniel Scharff
Just so you have hopefully as good of an understanding as possible about what the rules are, why they're saying what they're saying, and especially just thinking about what are the options here. Right. Because they. It's not also a regulatory consultant's job to really come up with creative options that would be the best fit for your brand. That will be true for consumers as well. But, you know, just help you with the thing that you're trying to do and how you're trying to show up to the world. So I definitely appreciate that part about the attorney knowledge being really helpful as well, because you fight the fights.

24:29
Lauren Handel
One other plug for attorneys, that whole. All of that communication back and forth about weighing risks, and we know this isn't compliant, but we're going to do it anyway if it's with an attorney. It's privileged and can't be discovered in litigation. If it comes back to bite you, which isn't the case if it's with a regulatory consultant who's not attorney.

24:45
Daniel Scharff
Well, I never thought about that. Oh my gosh. That's a very good note for everybody. So when you're having those discussions with your regulatory consultant and all of their findings, I mean, I think, you know, the important thing is to, I'd say, have that step. Okay, so let's talk about some specific claims out there. Maybe we could start first with. Because there are a lot around nutrient content, like how much protein or is it low fat? That kind of stuff. Can you tell me some of the rules around that?

25:15
Lauren Handel
Yeah. So just a kind of general matter. People should be aware that if you want to make representations about the level or amount of a nutrient in a product, that's called a nutrient content claim. Right. So outside the nutrition facts panel, if there is any sort of representation, whether that's using words like high or low or rich in or just saying X grams fiber, those are all considered nutrient content claims. And there are particular rules in the code of federal regulations about these kinds of claims and they are allowed only if you follow those rules.

25:53
Lauren Handel
Right.

25:54
Lauren Handel
So you're not allowed to make up your own words. Right. So you'll see people say things like packed with. Packed with is actually an impermissible nutrient content claim because it's not defined. So you're allowed to use particular words like contains, good source, high end, rich in, chock full of, excellent source.

26:14
Lauren Handel
Right.

26:14
Lauren Handel
Chock full of just is not a permissible claim. And those, you know, low more. And they're defined with respect to, for the most part, with respect to percent daily value.

26:28
Lauren Handel
Right.

26:28
Lauren Handel
So a good source is between 10, 19%. A high end or rich in is 20% or more. So you have to meet those criteria of the definition and the rules and use the language that's permitted in the rules. And then for certain kinds of nutrient profiles, additional disclosures may be required. So for example, if a product has above certain levels of fat or cholesterol or sodium and you make a nutrient content claim, if the. The idea is, yeah, sure, you can call out this positive attribute, but you also need to alert consumers to the fact that the product has relatively high amounts of these quote unquote, bad nutrients by putting this disclosure next to that call out. So they're detailed rules. There are some nuances to them.

27:24
Lauren Handel
They are not very user friendly to read, but it's just Important to be aware that they exist.

27:31
Daniel Scharff
How good of a job do you think ChatGPT is doing if you're like, hey, I do have a specific question just about that protein thing. Maybe I'm not even at the point where I'm ready for a label review, but I'm just curious about what law says. Like you, I'm sure you've experimented with this. If I throw into ChatGPT, like, what are the rules about protein labeling, is it going to give me a decent answer? Just as like a starter, Obviously, like, you know, I'm not going to rely on it for full legal advice.

27:53
Lauren Handel
But, yeah, you know, I haven't experimented with myself. I have had plenty of clients whether saying, this is what ChatGPT told me or that or. And to have it verified. And I'd say it does a decent job. I mean, it's definitely. I've found mistakes, for sure, but do not rely on it 100%. It doesn't do a good job of understanding the interactions between the rules.

28:20
Lauren Handel
Right.

28:21
Lauren Handel
So I've had clients come to me and say, this is what chatgpt says I can do. I say, okay, yes, you can do that. But then you also have to add this disclosure or it's certainly not going to have the big picture of, okay, yes, you can do that, but there may be a risk of misleading consumers because of the particular kind of product you have and s. Composition.

28:47
Daniel Scharff
So, yeah, okay, that's good to know. I mean, I, like, I'd love to.

28:50
Lauren Handel
See somebody actually really put it to the test.

28:52
Daniel Scharff
Yeah, right. I mean, I'm sure there. I know there will be great tools that can do a lot of the work, which, you know, is. Is helpful, especially when you're just kind of in the ideation and design phase, just to know the kind of lay of the land. Like, all right, I have a good understanding generally what we can do, and then we can tweak it later once we really get the, you know, full advice from somebody. By the way, I just remember you were talking about the different risks and, you know, retail buyers, you know, it's interesting. Some retail buyers out there really go deep and on these kind of areas. Like, I'll just. Yeah. Give props to Russell from Erewhon, because I've walked booth to booth with him before at a show and oh, my gosh, that guy got. He.

29:33
Daniel Scharff
He knows a lot. It's incredible. He just, he'll like, pick up a product and flip it around and just turn it back over and look at the brand and tell them the four things that's wrong with their packaging. And he just did that after like four or five. I was like, hey man, I just got to ask you, like, are you a food scientist also or like, what's your. It was really incredible because it was so impressive how he just knew so much with, I mean there are awesome buyers out there who obviously have incredible expertise, especially in their craft of buying. But I had never quite seen anyone go that deep on labels. And yeah, I mean for him, it turns out he just has a very deep background doing that stuff.

30:07
Daniel Scharff
He'd worked at a co op for a long time that was, they were very, I would say, tight on looking at labels, you know, for their choppers and everything. So, I mean, yeah, it sounds like Whole Foods, you're saying, is getting a lot tighter on looking at things like claims as well, which, you know, makes sense for somebody as big as they are with all of the brand reputation and you know, diligence that they're going to do. I had not seen that from a lot of smaller retailers. Like just me personally, I had never gotten questions about stuff on label. But anyways, I just thought that was an interesting anecdote. So good on you, Russell, for being able to know that much about stuff. It's, it's very helpful for brands because he actually would just give them stuff that was, yeah, super helpful.

30:50
Daniel Scharff
Okay, Lauren, I think what would be cool is maybe I can just hit you with a bunch of different questions about label stuff and you can, let's do the like rapid fire roundup on a bunch of things and you just quickly give me the lay of the land of each ones. All right, let's do it. Here we go. All right, first, health related benefits. So like, about like diseases and you know, structure function type claims.

31:14
Lauren Handel
Okay, so we already talked about drug claims, meaning just don't say anything about treating, mitigating, preventing disease. Disease means any not normal bodily condition, right? So just stay away from it. It makes your product or drug absolutely can't do it. Structure functioning claims are permissible. A structure function claim is a claim that a food or a supplement has an effect on a structure or function of the body. For food, that effect has to be derived from its nutritive value, meaning like its ability to sustain life, basically. So it's, you know, somewhat more limited class of structure function claims that you can make for foods as opposed to supplements. But the basic idea is it's allowed, provided you have the substantiation to back it up and Substantiation means scientific evidence, competent, reliable scientific evidence that your product delivers the benefit that you say it does.

32:17
Lauren Handel
The gold standard of that would be having clinical trials for your own product. Many expensive, don't have that. Super expensive. You know, it depends on the kind of product and how it's being positioned, of whether or not that will ever make sense to do. But it's not always required necessarily if in the development of the product you are relying on really well conducted, you know, good science. So there may be sufficient evidence out there that's been developed through clinical trials of ingredients, probably not your exact formulation, but of the key functional ingredients. And if that's good science, there's enough of it, you know, you can't cherry pick studies, say, oh, this one study showed what I wanted to, but there are 10 others that didn't find that or found something contrary.

33:10
Lauren Handel
But so looking at all of the science, is there enough evidence to support this? And then is it relevant to the product? Meaning is it the same ingredient that was tested in the same form, is it being consumed in the same way at comparable dosages, is it going to be used in the same way? Is there something about the processing of the product that could negate that effect? Or it's being blended with other ingredients that could have an interaction that negates the effect? Right. So all those things have to be considered. And if at the end of that you come away with, okay, yeah, we have enough evidence to support this, you can make that kind of claim. Now that's all supposed to be done before you make the claim. You dull submit any of that to fda.

33:56
Lauren Handel
They don't review it and say, okay, yes, we agree with you or we don't, you just do it. Now if it's a supplement, you're supposed to give notice to FDA of any structure, function claims that you're going to make. And then they might look into it if there were some issues. But again, they're not blessing your claim ahead of time as it would be with a drug product. So that's a category that's allowed. And then, you know, there's kind of the weaker alluding to health, you know, wellness, like talking about products that's basically good for you without identifying particular effects on the body where it's all looser.

34:36
Lauren Handel
Right.

34:36
Lauren Handel
You can get to a level of vagueness in how you describe things that, I mean, it's almost like what would be considered puffery, something that's not an actual statement of fact but more of like opinion, or it makes you feel Good and can't be objectively proven true or false. That is a safer territory from a legal risk perspective for that very reason that you can't really be deceiving somebody if what you're saying isn't an assertion of fact. So those are kind of, that's the spectrum from disease claim to fuzzy, makes you feel good, is better for you, that kind of stuff.

35:12
Daniel Scharff
I got it. Yeah. And I mean, I wish every brand could run their own studies to have that. But yeah, that stuff is expensive. There are people out there are companies who do it. But you know, especially bigger companies might pay for those studies. But I mean, they definitely can run multiple hundreds of thousands of dollars to be done the right way, if not more. But I know there are also people working on at least trying to make that a little bit more accessible. But the end of the day, you still have to have a study design, you have to pay participants, you have to make sure it's done the right way, all of that stuff.

35:41
Daniel Scharff
I also have just heard recommendations from a couple different people of like, if you're in one of these areas and you're kind of like, you're aware that it could become a thing with somebody at some point, whether it's a retail buyer, consumer, who knows, one at least easy thing that you can do is keep a live dossier, let's say, which could just be a Google Doc that you have open, where you are at least pasting the evidence that you have. Like here, look, this is the research that substantiates it and you collect it over time and you have it in that place. And if something comes up, then you can refer back to that.

36:10
Lauren Handel
Yeah, ideally and legally, you should have the evidence and mass before you make the claim, before you put it out in the world to advertise your product. So it is a very good idea to have a dossier, to have, you know, the folder where you've accumulated all of this. Or even better, to have an expert do all of this. Right. So as a lawyer who's not also a scientist, I can't look at my clients, the clinical studies that they've pulled together and say, okay, yes, you actually can substantiate this claim because I don't know enough about what makes the study reliable or not. Or is the author, are the author's conclusions valid or not?

36:48
Lauren Handel
Right.

36:48
Lauren Handel
You need somebody who's trained in that to really do that. And then they can compile all the things for you and say, based on all of this. You can say this claim, this way. But if you change the language, that would be going too far, that kind of thing. I can explain the legal theories. I can look at the evidence and say, there's no way you have enough. I'm qualified enough to say no, I know this is not enough science, or maybe you have enough, but go get an expert opinion.

37:17
Daniel Scharff
All right, let's continue down the rapid fire. Next, organic. People ask that one all the time. Like, but can I. Well, can I say at least there that we use organic dates on the front even though I didn't get it certified? What are all the rules here?

37:29
Lauren Handel
So unlike the labeling rules we talked about before, organic is regulated by usda, separate part of USDA than does the, you know, meat poultry labeling. But so national organic program regulations spell out all the rules for organic labeling. Basic rule other than in your ingredient list, you where you may identify certified organic ingredients as organic avocado, you know, something like that, you cannot use the word organic outside of that ingredient list. So nowhere else on your label unless you get certification for the product. So there are rules about, you know, if it has at least 70% organic content, you can have the product certified so that you can make a made with organic avocado oil claim, but that still requires certification. And then there's, you know, a hundred percent organic or just organic, which you know, at least 99%. So there are particular rules.

38:28
Lauren Handel
Basic idea, get certification if you want to be able to use the word organic anywhere other than the ingredient list.

38:35
Daniel Scharff
Okay, great. Next one natural. That's a big one. Because people ask that all the time, like, no, it's a natural product, you know, but there are a lot of things that people might not consider natural. Yeah.

38:47
Lauren Handel
So natural and all natural, 100% natural was the biggest area of food labeling litigation initially. Like 10 to 15 years ago. Like when food labeling litigation started to become hard hot, it was primarily focused on natural labeling. And as a consequence of that, a lot of brands stopped saying that or found different ways to try to say the same thing. So it remains a risky area. But there are kind of different versions of it now that be that gain more attention. There's no definition in any law of what is natural. There is guidance from USDA and FDA about what they consider to be, you know, where they would say, no, you really shouldn't say, this is natural. It's really highly processed.

39:36
Lauren Handel
If it contains artificial synthetic Ingredients, if from FDA's perspective, if it contains coloring, even from a natural source that's not considered natural under that guidance, or vitamins like If.

39:49
Daniel Scharff
Right. I think if you had, like, vitamins in there, like added vitamins.

39:52
Lauren Handel
Vitamins are mostly synthetic, right? Yeah. So anything that's made in a lab, natural. But in the way common language uses the term natural, it could mean a lot more than that, because different people can think different things. That leaves room for plaintiffs lawyers to make arguments. And that's what happened. So basically, it expanded to not just what's in the product, but also how it was grown or produced. So if it. If there was GMO ingredients in it and it was represented as natural, that's the subject of litigation. If it has traces of pesticides or PFAS chemicals, that's a new area, relatively new focus on PFAS chemicals and is represented as natural. That's a high litigation risk. So it remains a significant risk. But it's not just using the word natural. Representing the product has nothing artificial. No artificial flavors or preservatives.

40:49
Lauren Handel
That's another kind of. There's some nuance there about that, but that's a hot area, too. Synonyms like clean, real ingredients, pure.

41:02
Lauren Handel
All right.

41:02
Lauren Handel
There's. People try to get around it by saying you using different language. But you have to always be thinking, and this is what I do when I'm reviewing labels, is what's the overall impression that a consumer is going to take away from this messaging?

41:16
Lauren Handel
Right.

41:17
Lauren Handel
You don't want to just focus on particular words. It has to be kind of the whole thing altogether. And if the overall impression is this is some. I basically plucked this off a tree, natural kind of thing, and it's got something that's synthetic or that's really highly processed in it, that's probably going to be risky. Even if it came from a natural source to begin with.

41:41
Daniel Scharff
Not that overall, you know, generally, yeah, it's pretty good. Is going to prevent you from getting sued for a specific thing that becomes a hot button in the industry. But at least. Yeah. And I. It's funny, I remember I hear. Heard from one Laura. They're like, there are ways you could, like, you could even actually call the brand Natural, like Daniel's Naturals. Like, that would actually be okay, as long as it's not something that you're talking about on the packaging as, like, a claim about the product so that you're not nodding your head to that. But I'm like, okay, yeah, I notice. Yeah. And a lot of packaging, like, I'm holding up a syrup in front of me right now, and it says, yeah, no artificial flavors, sweeteners, or synthetic colors.

42:20
Daniel Scharff
So you know, they can say a bunch of those things that are true without saying no artificial ingredients. Right.

42:26
Lauren Handel
So, yeah, and well, but so here's the rub with that one. So it's syrup. I don't know what kind of syrup it is. But if where there has been a lot of litigation around that kind of representation is for products that have citric acid, malic acid, ascorbic acid, these acidulants that can be put into food products for various purposes. If you say it has no artificial flavors, and you may think that is a true statement, focusing only on the flavorings that you're using, like I only use vanilla extract, so no artificial flavors. But it had citric acid in it. Maybe, you know, it was just to adjust the ph for shelf life purposes. But if it's the kind of flavor that citric acid could contribute to, and vanilla was probably a bad example for this.

43:15
Lauren Handel
But if it's adding to the tartness of the flavor, the plaintiffs lawyers have argued it is an artificial flavor because the citric acid, although it does citric acid, does exist in nature. The vast majority of citric acid that's used in commercial production is synthetic. That's an artificial flavor. And that theory has gained enough traction to still be a, a pretty big litigation risk.

43:41
Daniel Scharff
That'll be an interesting one to watch. Cause I know, I mean, just use of citric acid in beverage and food products has skyrocketed. Like citric acid, natural flavors in a lot of the low calorie stuff that we're seeing emerge in different categories. Okay, cool. Let's keep it going here. So what about things like vegan, vegetarian, plant based?

44:02
Lauren Handel
Yeah, Again, not defined in any rules. And so this is the general rule of what would reasonable consumers think this means, and are you complying with that understanding of the term?

44:16
Lauren Handel
Right.

44:16
Lauren Handel
So what are the dictionary definitions of these terms? What evidence is there of what consumers believe? I think these are ones. Well, vegan and vegetarian, I think are widely enough used and part of our language that most people have an understanding of what that means. And so long as from a, you know, if it's, if a claim is vegan, there should be nothing in there that has ever been derived from animals.

44:40
Lauren Handel
Right.

44:41
Lauren Handel
That includes honey, that includes sugar, that's been processed with bone, char.

44:46
Lauren Handel
Right.

44:46
Lauren Handel
So you'll be. Want to be looking at flavorings too. Some flavorings are made with animal derived ingredients. So you want to be looking at spec sheets from ingredient suppliers to make sure that they are consistent with vegan claims. Vegetarian, you know, that could include Dairy or egg products. Plant based is trickier. I think there's some disagreement about what plant based means. I tend to think it means vegan, but apparently not everybody thinks that. So for that reason it's a little riskier. I think the safest course is to treat it the same as vegan.

45:24
Daniel Scharff
Okay. Environmental benefits, sustainable, stuff like that.

45:29
Lauren Handel
Yeah.

45:30
Lauren Handel
So the Federal Trade Commission, which, you know, we haven't talked about before, but the Federal Trade Commission is the agency at the federal level that has responsibility for truth and advertising laws. It has something called the Green Guides, which is all about environmental claims. And it is good to read material if you, if that is how you intend to represent your product. They're, they're not rules per se about particular kinds of claims, but concepts that are important. And a big one is really broad. Claims like sustainable or eco friendly can mean so many things, and it's kind of like natural, but maybe even more so.

46:09
Lauren Handel
It can mean so many different things to different people and can relate to so many different aspects of the supply chain and production process of a food product that it's almost impossible to substantiate all of the possible meanings of those broad claims. So if you're stepping into this territory of wanting to represent your product as sustainable, you know, you could go and do the full lifecycle study of the product and, you know, be able to support that from a seed is planted in the ground for every single ingredient all the way till it gets to consumers on the shelf that it is sustainable. I mean, I don't know that would actually be possible. You have to be thinking about what do you mean by what can you actually support?

46:54
Lauren Handel
And so how do you need to narrow or qualify the claim so that it is truthful in a way that you can support? And you know, if what you mean by sustainable is the farmers that grow these main ingredients have implemented resource conservation measures and are using less water, whatever it is, or you know, you're actually measuring greenhouse gas emissions, whatever it is, qualify the claim. Whether that's, you know, you might have a claim that says sustainable, but you know, near that uses less water, uses 50% less water than comparable products or whatever it is, narrow it in the way that you can support so that you're protected from the accusation that you're deceiving people about some other aspect of the life cycle that you didn't think about.

47:45
Daniel Scharff
Okay, so maybe you'll say it's somewhat similar but like ethical sourcing type claims then, you know, fair trade.

47:51
Lauren Handel
Yeah, they're all these fuzzy words. Right. So fair trade, there's a certification. There are certifications around animal welfare. We can talk about certification specifically. The benefit of a certification is there's a standard that people can look up. And so, you know, if we say this is animal welfare approved, then I can go online, I can find the standard and read it to see what does that mean about how the animals were raised. But if you don't have that, then the language just humanely raised, ethical, fair labor standards, whatever it is, are pretty vague and subject to lots of different interpretations in ways that you might not be able to substantiate. And so you have to be careful about that and qualify things appropriately to what you can actually support.

48:38
Daniel Scharff
Okay. And just, can you just talk about third party certifications overall? A little bit. We talked about fair trade. Yeah. I mean, do they give you some kind of protection against lawsuits if you go through the process? How do you think about them on the packaging?

48:51
Lauren Handel
Yeah, I mean, so in a sense, yes, they can give you protection in that. If, if your only representation about, say, animal welfare is the certification, and so you put a little logo on that's the certification mark of whatever the organization is that you're using, then it's tied to a standard. And for the most part, you know, that's helpful to protect against consumer confusion. It's not a hundred percent, though, because there have been plenty of lawsuits, especially around things like animal welfare, fair trade kinds of things, where the argument by the plaintiff's lawyers has been, yeah, you got certified, but the certification is kind of bogus. You basically worked with the certifier to come up with the certification.

49:36
Lauren Handel
And this is mostly for, you know, big industry, but you sort of created the certification and, or, you know, it doesn't have very rigorous standards, or the standards aren't enforced very well. And so you're trying to hide behind the certification, but really it's all not true. So that possibility. But for the most part, the certification does mitigate risk because it has a defined standard. Now, the problem is that people will sometimes go beyond that. You'll have the certification, but then make all kinds of other representations that go beyond what the standard even addresses. Or, you know, there's no auditing of these kinds of things that people want to say about their products. So you still need to make sure that you have substantiation for the claims that go outside the standard.

50:25
Daniel Scharff
Okay, gotcha. So maybe just one more question here before we wrap, which is. So we're talking a lot about on pack stuff as well. But often this is going to set the foundation for also how you talk about the product through other mediums. Whether it's your website or some ads that you're doing, you know, pictures on Instagram. Is there a difference between the stuff you're going to say in all those places? What do you need to worry about? I think that's kind of an afterthought for people, but also it's important.

50:54
Lauren Handel
Yeah. So my view is no, there's no difference. There's differences in your risks of getting caught basically. But essentially the same rules apply everywhere. You know, it's not literally true that the on package regulations for like nutrient content claims apply in an advertising context, but the Federal Trade Commission says it will, it defers to FDA and basically follows the same standards. So if FDA has defined a claim and you're using it in advertising in a way that's inconsistent with that claim, then you know, if it's deceiving to consumers, that's also a violation of advertising rules. The safest thing is to treat everything consistently across all platforms and marketing channels and just do it all the same way. But it's also, there's a very fuzzy line these days with E commerce between labeling on the package and advertising. Right.

51:53
Lauren Handel
If you're selling your product through your website, then your website is also labeling. So the rules do apply in that context. So I see it all as the same.

52:03
Daniel Scharff
Yeah. And I mean in terms of like again, just talking about the risks of maybe some of those lawyers, those very like lawsuit happy lawyers that we see out there, it seems to me like how likely are you to get on their radar in general? Well, okay, if you get a lot of press or you're, you know, they like somehow you get a lot of attention, it seems like that's when they start looking at you. And my guess is they're more likely to just look at product images that you have online. So it's good to be cognizant of what's out there. And especially if you did make updates to your packaging are. Is that reflected in what's online? So, and I think just good for people to think about. So tell me if it's fair.

52:42
Daniel Scharff
Like as we kind of wrap here, a good practice for an early stage entrepreneur who maybe doesn't even know all these rules when they're starting out is you know, you're going to go out there and have your dream for your product, what you want to do. I like the idea of spending a lot of time on shelf in the grocery store. Looking around your category and seeing what's common in your category, especially for products that may have somewhat of a similar composition to yours, as well as looking in other categories, because you may see ways that people are making claims or talking about their product that where that really resonates with you. Like, yeah, that I want people to feel that way about the product. And here are a lot of options out there.

53:18
Daniel Scharff
You can get some of those options from a regulatory person or attorney, but they may also not think of the kitchen sink and throw it all at you because you know it's not their product. Right. So I like the idea of just getting out there and getting really familiar with all the stuff that is out there in the realm of the possible at least because you're going to have to make tweaks your packaging after you talk to a consultant for sure. Almost always. And almost always after it's in market as well. You're going to find out some things you need to change. But at least, you know, a good starting point. Like, great, here's my dream. Okay, what is at least the framework for stuff that's out there? Here's a bunch of inspiration that I can get.

53:51
Daniel Scharff
Come with something, get somebody to look at it, probably have to tweak it, get it out into market, then probably have to tweak it a little bit more later on. How does that feel to you?

54:00
Lauren Handel
I would just caution people about looking to the marketplace as evidence of what the law is.

54:05
Lauren Handel
Right.

54:06
Daniel Scharff
Inspiration, yes. Not, not a problem.

54:08
Lauren Handel
Inspiration. Just know that.

54:11
Lauren Handel
Right.

54:11
Lauren Handel
My analogy, which is, you know, it's kind of trite, but it's true, which is you don't look at how fast other people are driving on the road to know what the speed limit is.

54:20
Lauren Handel
Right.

54:21
Lauren Handel
Everyone has a different risk tolerance. Some people have a much bigger budget for defending lawsuits than others. And there is a lot of non compliance out there, which is why there are so many lawsuits and threatened lawsuits.

54:32
Lauren Handel
Right.

54:32
Lauren Handel
There's plenty of people not following the law and you have to know for yourself what your own risk tolerance is. So yeah, get ideas by all means. Certainly know your competition and know what they're doing. And you know, and also you may have your own claim against your competitors who are doing it wrong, who are not truly representing the attributes of their product. That's another kind of litigation is competitor litigation, which we haven't talked about, but that also exists. Just, you know, do it with some skepticism knowing that there's a lot of non compliance out there.

55:05
Daniel Scharff
I Totally agree with that. And for your speeding analogy, I will also offer one back, which is a joke that I once heard, which is a guy speeding on the highway, you know, crowded day, tracks, going really fast, and he gets pulled over by a cop. And he's right behind a bunch of other cars going the same speed, and he gets pulled over and he's hopping mad. He says to the officer, why'd you pull me over? Like everybody else, going the same speed. What's the deal? And the officer says to him, you ever been fishing? Guy's like, yeah. He's like, you ever catch all the fish? So, right, anyways, if you're. But if you're. Yeah, you know, if you're driving the bright red Ferrari, you're getting a lot of attention.

55:44
Daniel Scharff
You might be a little more likely to get pulled over in that instance, but yes. Anyways, our wish for all the brands is to say things that are true. Don't be about their packaging, don't be the fish, and at least label your fish appropriately. And, you know, I just hope for everyone they don't have to go through some of these ordeals that can really just, you know, be. I'd say they really cause a lot of anxiety, especially when you're early branded, just feel like the worst thing that's ever happened to you when you start getting these letters from people. So I hope everybody takes the appropriate precautions, launches amazing products with the great guidance that they can get. Lauren, what's a great way for people to follow up with you if they're interested to learn more?

56:24
Lauren Handel
Well, I'm in the Slack community. You can find me there. You can find me on LinkedIn, you can email me laurenandalefoodlaw.com find my website all those ways.

56:35
Daniel Scharff
All right, everybody, thanks for listening. This was a really great one. I hope everyone got as much out of it as I did. See you all soon. Thank you, Lauren.

56:43
Lauren Handel
Thank you.

56:46
Daniel Scharff
All right, everybody, thank you so much for listening to our podcast. If you loved it, I would so appreciate it if you. If you could leave us a review, you could do it right now. If you're an Apple podcast, you can scroll to the bottom of our Startup CPG podcast page and click on write a review. Leave your company name in there. I will try to read it out. If you're in Spotify, you can click on about and then the star rating icon. If you are a service provider that would like to appear on the Startup CPG podcast, you can email us at partnershipsstartupcpg.com lastly, if you found yourself grooving along to the music. It is my band. You can visit our website and listen to more. It is superfantastics.com thank you everybody. See you next time.