Deceptive Marketing and Advertising

Deceptive food marketing and advertising is a complex and growing problem as consumers demand healthy foods and manufacturers seek new ways to sell their products to those discerning customers. The regulations governing this area are the responsibility of several governmental agencies, some of which certain consumer groups consider to be ineffective. Some industry participants and activists are particularly concerned about the marketing of “organic” foods with respect to nutrient content and health-related claims, advertising campaigns aimed at children, obesity as related to fast foods and misleading labeling. Manufacturers may look to their insurers for coverage of all types of deceptive food marketing claims.

Background

The FDA is charged with protecting the public health by ensuring the proper labeling and safety of all foodstuffs except for meat, poultry and processed eggs, which fall under the authority of the U.S. Department of Agriculture (USDA). The Center for Food Safety and Applied Nutrition (CFSAN) under the FDA is responsible for food and cosmetic products and an office within CFSAN publishes food labeling guidance. The FDA’s Office of Regulatory Affairs cooperates with state authorities to conduct food safety inspections during which some label examinations also take place. The FDA also investigates misbranding allegations. In 2016 the FDA issued new labeling guidelines, an action that has drawn objections from food manufacturers. The new presidential administration has resulted in the FDA taking less of an aggressive approach. In July of 2025, the FDA announced that it was planning on revoking 52 food standards after concluding that they were dispensable. Additionally, in February 2025, the FDA focused on deceptive labeling of “artificial colors”, asserting that it would engage in less enforcement under the Food, Drug, and Cosmetic Act.

Consumer activists have sought to influence the marketing behavior of food companies in part by filing lawsuits against the manufacturers, especially because a number of groups perceive a void in the regulatory authority of the FDA. Many suits filed by consumer groups assert that the term “natural” has been used to mislead consumers. The FDA has issued only an informal policy with respect to the term that operates as an advisory opinion, consequently, the meaning is subject to litigation. Products that have generated controversy may have contained artificial preservatives, a highly processed sugar substitute, or might have been processed with chemicals. Some groups have filed suit against large manufacturers on the basis that GMOs are “inherently unnatural.”

Plaintiffs have brought suits alleging that companies have used food labels advertising that items are “nutritious” or “wholesome” even when the products contained trans-fats or a considerable amount of sugar. Products using the term “evaporated cane juice” on the label instead of the more commonly used “sugar” have come under fire. Health claims appearing on labels have generated litigation, for example, beverages that are promoted as leading to weight loss or reducing the risk of chronic disease. Manufacturers have been sued over marketing that states that a certain ingredient in the product, such as Omega-3, can cure a medical condition; plaintiffs have contended that such labeling made the product a “drug” requiring that the FDA pre-approve it and established “daily value”. The nutrient claim “no sugar added” with respect to ice cream products and baby food has led to lawsuits.

Injuries and Damages

The impact of the alleged deceptive marketing of food is widespread, as evidenced by the examples below.

Labeling

American consumers are demanding healthier food and are willing to pay more for foods they believe are organic, locally grown or “natural.” This has encouraged food manufacturers to label processed foods with terms that the public generally finds attractive but that are not accurate, leading some consumer groups to complain that FDA oversight of deceptive labeling in this context has been too limited. In 2005, Congress responded to the complaints by asking the FDA to report on non-safety-related food violations. In 2008, the General Accounting Office concluded that the FDA was not keeping pace with food company labeling issues. In 2009, the FDA announced that labeling was a top priority and sent out a “Dear Industry” letter expressing its concern and urging compliance. The FDA also issued several “Warning Letters,” but many believe that misleading labeling continues to be an issue. In 2025, FDA targeted pharma and medical industries, issuing over 470 warning letters.

Some advocacy groups contend that the FDA has given up on effectively regulating truthful labeling due to legal and resource limitations, accordingly, certain groups have sought to fill in for what they assert is inadequate regulation. The nonprofit advocacy group Center for Science in the Public Interest (CSPI) has been able to bring about changes in labeling: yogurt-maker Dannon agreed to a $45 million settlement relating to its advertising of the digestive benefits of its “Activia” probiotic yogurt; PepsiCo paid $9 million to settle claims that its “Naked Juice” was deceptively labeled as “all natural” although it contained genetically modified organisms (GMOs); and, General Mills and Kellogg’s have settled suits launched by CSPI.

Marketing to Children

In 1977, the CSPI and the organization known as “Action for Children’s Television” petitioned the Federal Trade Commission (FTC) to halt TV commercials which advertised candy and sugar-laden snacks to young children. The FTC examined the issue and reported in 1978 that advertising directed to children who were too young to appreciate that the purpose of selling or otherwise evaluate the advertising was inherently unfair and deceptive. The food and toy industry opposed the conclusions, tried to stop hearings on the matter and lobbied to prevent the FTC from going forward in general. Advertisers began a voluntary program to improve child-directed advertising. In 1980 Congress barred the FTC from issuing industry-wide rules to stop the advertising practices, and ads aimed at children became regulated on a case-by-case basis. The FTC referred to the possible remedy of a ban on all ads oriented toward young children, but concluded that if not for advertising income, funding for children’s TV would be non-existent.

Currently, children are supposed to be protected from inappropriate food marketing by the Children’s Advertising Review Unit (CARU), a program run by the Council of Better Business Bureaus, under the “Self-Regulatory Guidelines for Children’s Advertising.” Compliance is voluntary. CARU is said by some industry critics to be funded by several well-known food producers and food and toy trade associations; those critics maintain that objectionable ads are withdrawn but often replaced with new ads that use different advertising techniques but do not represent real change. Experts note that there is still a great deal of advertising of candy, fast food, sweetened cereals and salted snacks during children’s programming. The food industry has recently voiced concern about obesity in children, but it is generally believed programs intended to reduce such marketing are unlikely to be successful absent a sustained public outcry.

Organic food

Marketing organic food as healthier than conventionally grown or treated produce or other products or has come under fire as a form of deceptive advertising. Whole Foods Market, Inc. has been accused of citing research to support its marketing of organic foods that was provided by biased sources such as the Organic Center, an organization affiliated with organic food and supplement manufacturers -- while ignoring information published by researchers at Stanford University’s Center for Health Policy which found that organic food was on the average no safer or healthier than cheaper conventionally produced items.

The organic food movement is one of the fastest-expanding trends in modern history, and some industry critics have accused organic-food purveyors of engaging in “intentionally deceptive” marketing to keep it growing. In response, some manufacturers have pointed out that under U.S.D.A. standards, “organic” food must be grown without persistent pesticides or the use of GMO seeds, and that “organic” livestock must be raised without antibiotics and hormones. It has also been stated, however, that both the organic product industry and the government fail to make clear that even though the USDA “organic” seal does not address food healthiness or safety, USDA’s own consumer polling reveals that more than half of the respondents believe that food marked with that USDA seal is healthier and safer, and that nearly half consider food that carries the seal to be more nutritious.

Obesity Litigation

Starting in the early 2000s, fast-food companies became the target of plaintiffs alleging that fast food caused health problems. Although obesity-based lawsuits have been largely unsuccessful in terms of damages awards, some experts believe that changes in the past few years in the way the food and drink industry packages, markets and even makes food has been a direct result of obesity lawsuits. As of 2018, most states have prohibited individuals from filing suits against fast food companies, restaurants and manufacturers for making them fat or ill.

Legislation and Regulation

In 1938, the Federal Food, Drug and Cosmetic Act (FDCA) gave the FDA the power to set standards for food quality, including nutritional labeling. The 1990 Nutrition and Labeling Education Act (NLEA) is intended to regulate health claims on food packaging, standardize nutrient content claims, and require certain nutritional information on labels.

Both the FTC and the FDA have some jurisdiction over the advertising of food. The FTC has primary responsibility for the truthfulness of advertising. The FDA governs labeling, however, many industry experts state that the FDA lacks the enforcement authority to actually deter food companies from making misleading claims on labels. The FDA can issue a “Warning Letter” which is intended to gain voluntary compliance, but this provides little true incentive for companies to change their labels. More severe responses may be imposed on companies only if the mislabeling could cause adverse health consequences, such as a label missing allergen information.

FDA guidelines allow three types of health and nutrition claims on food packaging, each subject to different rules: 1) health and qualified health claims; 2) nutrient content claims; and, 3) structure/function claims.
• “Health claims” characterize the relationship of any substance to a disease or health-related condition. Such claims must be limited to statements about disease reduction and cannot be about the diagnosis, cure, mitigation or treatment of the disease, and must be scientifically supported.
• A “nutrient content claim” characterizes the amount of a certain nutrient in a food, often using terms such as “high,” “low,” “light,” “reduced,” or “healthy.” The FDA sets specific standards and definitions for each nutrient content claim.
• “Structure/function” claims need not be pre-approved by the FDA and no particular level of scientific support is required; such a claim may describe the effect that a substance has on the human body but not mention diseases. An acceptable example might be “calcium builds strong bones.”

In May 2016, the FDA introduced new requirements for the standard nutrition label. Experts have stated that the new label highlights breakthroughs in nutrition science and awareness of certain diseases. It has been reported, however, that many food manufacturers objected to some features of the new label on the basis that the new label suggests that the food industry bears partial blame for some consumer’s poor health with respect to added sugars, large portion sizes and high calorie counts. The new label was originally required to be in use as of July 26, 2018 for most products, however, the FDA extended the compliance date to January 1, 2020 for manufacturers with $10 million or more in annual food sales, and until January 1, 2021 for smaller companies. The areas that have changed on the label include serving sizes, total calorie count, added sugars, information regarding multi-serving and odd-size packages, sodium and fiber content, vitamins, the way fats are listed, and how the daily values of nutrients are expressed.

Liability and Insurance

For insurance coverage, food manufacturers may look to their commercial general liability (CGL) policies for coverage of third-party claims arising from bodily injury, and to respond to false advertising claims under the “advertising injury” provisions. This potential protection, however, may be defined too narrowly to fully respond to allegations. Companies are also likely to look to their directors’ and officers’ policies, but these provisions may also be restricted to narrowly defined categories such as securities actions. Insurers and food manufacturers will likely consider the genuine risk of brand damage or other harms beyond strict legal liability, and draft policy language accordingly.

Litigation

Litigation often involves the examination of advertising claims that are either legal or unregulated -- but still misleading -- or that violate state laws mirroring federal laws. Three highly publicized suits are discussed below. In FTC v. Colgate-Palmolive Co., the Court determined that under Section 5 of the Federal Trade Commission Act, which prohibits “deceptive acts in commerce,” any misrepresentation that influences a consumer’s decision to purchase a product is unlawful. Several highly publicized suits involving deceptive food and drink marketing are discussed below.

San Francisco

On December 2, 2025, San Francisco sued ten major food producers, including Coca-Cola, Kellogg Company, and General Mills. This was a major form of litigation because it was one of the first cases filed not by individuals but by a city government against food manufacturers that have long faced pushback for their unhealthy practices. The city argues that these companies produced ultra-processed foods with harmful preservatives that pose serious risks to human health, costs that the city ultimately had to bear for its residents. The case centers on “hidden health harms,” with the city alleging that the companies deceptively marketed these products as healthy despite knowingly exposing consumers to significant risks and potential long-term damage. [California vs. Kraft Heinz Co., et al]

Tyson

In July of 2019, Tyson Foods, Inc. was sued by two consumer advocacy groups over fall environmental advertising. These groups, Food & Water Watch Inc. and the Organic Consumers Association, argue that Tyson uses false advertising. Tyson’s website, social media accounts and other avenues portray its employees as "stewards of the animals" who are dedicated "to environmental leadership" and "protecting the planet." The plaintiffs claim this is a lie. The advocacy groups claim that the environment is something that consumers care about. The case has not yet been heard as of August 2019. [Food & Water Watch Inc., and Organic Consumers Association vs. Tyson Foods, Inc.]

Nutella

Two class action suits were filed against Ferrero, maker of Nutella spread, over misleading advertising. The litigation was settled in 2012 for over $3 million and Ferrero’s agreement to stop running TV ads that emphasized the ingredients of hazelnuts, skim milk and cocoa, but did not mention main ingredients of sugar and palm oil or the high calorie count and fat present in each serving. [In re: Ferrero Litigation, No. 3:11-cv-00205 (S.D. Ca.) and In re: Nutella Marketing and Sales Practices Litigation, No. 3:11-cv-01086 (D. N.J.)]

5-hour Energy Drink

In 2014, several states filed lawsuits against the makers of the drink “5-Hour Energy” for alleged deceptive marketing. Activists concerned with truth in labeling disputed whether “5-Hour Energy” provided the claimed extra energy, focus or alertness. The manufacturer advertised that the beverage contained B-vitamins for energy and amino acids for focus, as well as enzymes causing those effects to take place more rapidly. In addition to challenging the advertising claims, some filings challenged the safety of the product for younger users, and sought injunctions against the alleged deceptive marketing, restitution for consumers, and financial penalties for violation of consumer protection laws. A Washington state court ordered the company to pay millions in penalties and fees for deceptive advertising techniques on the basis that it had tricked customers into thinking that “5-Hour Energy” was a more effective energizer than caffeine. [In re 5-Hour Energy Marketing and Sales Practices Litigation, No. 13-ml-02438 (C.D. Cal.)]

POM Wonderful

In 2013, the FTC upheld an administrative decision that POM Wonderful 100% Pomegranate Juice and POMx supplements had engaged in false or deceptive advertising in dozens of advertisements claiming that the products could treat, prevent, or reduce certain diseases and conditions -- claims which the FTC order barred unless it was supported by human clinical trials. In 2016, the U.S. Supreme Court declined to review a 2015 ruling from the Court of Appeals for the District of Columbia Circuit confirming the FTC's decision. [POM Wonderful LLC, et al., Petitioners v. Federal Trade Commission, No. 13-1060 (U.S. Circuit Court of Appeals for the D.C. Circuit, May 4, 2015)]

Future Outlook

The area of deceptive food marketing is one that demands close attention from insurers. Industry experts agree that in today’s health-conscience atmosphere, food companies are likely to continue to see an increasing number of lawsuits alleging that their advertising or labeling is misleading as they seek to present their food products as beneficial to health; those manufacturers will look to insurers for coverage. Also, given the complex interactions of the governing agencies, the allegedly inconsistent application of regulations, the desire of food manufacturers to increase sales, the high dollars at stake in class action suits and widespread consumer confusion, insurers need to be closely involved in bringing clarity to the situation.