National Consumer League Challenge Regarding Starbucks “Ethical” Claims Highlights Continued Focus On “Fairwashing,” Despite Company Reliance on 3rd Party Verification

Starbucks is one of the latest corporations to be accused of unfair and deceptive trade practices due to purportedly false claims that appear on its label. The National Consumers League (NCL) filed suit in D.C. Superior Court, accusing Starbucks of misrepresenting to consumers that it is “committed to 100% ethical coffee sourcing” when it sources its coffee beans and tea leaves from farms that have committed human rights abuses in violation of the District of Columbia Consumer Protection Procedures Act (DCCPPA).

The complaint, which is furnished with quotes pulled from Starbucks’ labels, webpages, advertising, and press statements, argues that the corporation has capitalized on the consumers’ interest in “ethically sourced products” by holding itself out as a company that is committed to global human rights. The Plaintiffs argue, however, that its representations do not match up with the company’s actual supply chain practices.

This practice, referred to colloquially as “fairwashing,” has been the target of ethical watch dogs for the past decade, and refers to brand advertisements that refer to the fair treatment of its workers without consideration of the workers’ actual conditions. Plaintiffs will scour a company’s webpage, social media presence, advertisements, and statements by its officers to support their allegations that a company is attempting to fairwash their image. To support their allegations, Plaintiffs cite to investigations conducted by independent investigators in Brazil, Kenya, and Guatemala detailing the labor abuses at farms associated with Starbucks’ supply chain. Newly published reports of this kind can often become the genesis of lawsuits.

Additionally, NCL, like many nonprofit organizations before it, likely filed in D.C. Superior Court to take advantage of the DCCPPA provision enabling nonprofit organizations to bring an action on behalf of the consumers, or class of consumers, likely to be deceived or misled by those practices, so long as those organizations have a sufficient nexus to the interests involved of the consumer or class to adequately represent those interests. The complaint states that “a central part of [NCL’s] work is to hold companies accountable for the claims they make on food products” in order to satisfy the DCCPPA’s sufficient nexus requirement.

Sally Greenberg, the CEO of National Consumers League, said in a press release: “NCL is committed to exposing and reining in these deceptive practices and holding Starbucks accountable for living up to its claims.” In response, Starbucks announced plans to “aggressively defend” against Plaintiffs’ claims of misrepresentation, and cited to its Coffee and Farmer Equity Practices — a 20-year-old verification program that includes a third-party verification process — as evidence of its commitment to ethical sourcing.

The NCL is seeking an injunction to prevent Starbucks from continuing to advertise in violation of the Consumer Protection Procedures Act.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.