[OKRA] TerraCycle and brands sued over recycling claims

[Ellen Bussert]

This is an interesting article about recyclability of products.  Knowing if
something can be recycled can be confusing for the average consumer.  The
desire to *"Wish-cycle"* is strong.  Opportunities to recycle things are
tempting, but are they real?  Do programs such as this cause more
contamination from confused or disgruntled recyclers, or do they offer
opportunities to recycle hard to recycle items?    What are your thoughts?


[image: image.png]



[image: logo] <https://www.resource-recycling.com/recycling>

TerraCycle and brands sued over recycling claims
<https://resource-recycling.com/recycling/2021/07/27/terracycle-and-brands-sued-over-recycling-claims/>
Published: July 27, 2021
Updated: July 27, 2021
by Colin Staub <https://resource-recycling.com/recycling/author/colinstaub/>
[image: TerraCycle logo]

*The lawsuit alleges TerraCycle is enabling brand owners to mislead the
public on the recyclability of their products.* | *photo_gonzo /
Shutterstock*

A nonprofit environmental organization is suing TerraCycle and several
major brands, saying the companies are misleading consumers about the
recyclability of their products through mail-in collection programs.
TerraCycle’s CEO discussed the company’s labeling in an interview.

The Last Beach Cleanup on March 4 filed the civil complaint
<https://www.lexlawgroup.com/wp-content/uploads/2021/03/2021-03-04-Complaint-Terracyclefx.pdf>
in
the Superior Court of California, County of Alameda. It centers on
recyclability claims in product labeling. Resource Recycling learned of the
suit last week.

The filing names as defendants specialty products recycling company
TerraCycle and consumer goods companies CSC Brands, Gerber Products
Company, Late July Snacks, L’Oreal USA, Materne North America, The
Coca-Cola Company, The Clorox Company, The Procter & Gamble Company, and
Tom’s of Maine.

TerraCycle operates mail-in recycling programs for various hard-to-recycle
products, particularly household goods and packaging. All of the brand
owners named in the suit participate in TerraCycle’s recycling service,
advertising mail-in collection availability to consumers.

The lawsuit says the on-label claims are “deceptive to a reasonable
consumer.”

In an interview with Resource Recycling, TerraCycle CEO Tom Szaky spoke
about the company’s labeling practices and recycling process, although he
declined to speak in detail about the lawsuit specifically.

“We disagree with any and all of the claims that are made,” Szaky said.
Key question of access

The legal action is the latest in a string of lawsuits targeting companies’
recyclability claims. Greenpeace in December 2020 sued
<https://resource-recycling.com/recycling/2020/12/15/lawsuit-takes-aim-at-walmarts-plastic-recycling-labels/>
Walmart
over the company’s recycling labels for packaging made from plastics Nos.
3-7. Keurig in 2018 was sued
<https://www.wastedive.com/news/lawsuit-over-keurig-coffee-pod-recyclability-moving-forward/558449/>
in
a class action complaint over the recyclability labeling on its coffee pods.

The law firm in those two case as well as the TerraCycle action
<https://www.lexlawgroup.com/our-work/> is Lexington Law Group, based in
San Francisco and focused on public-interest litigation, according to its
website.

California’s Business and Professions Code contains particularly expansive
regulations protecting consumers from misleading business communications.

The latest action focuses primarily on the labels TerraCycle brand partners
place on their packaging.

“TerraCycle, Inc. prides itself on working with companies to offer free
programs for consumers to recycle products that established municipal
recycling programs are not capable of recycling,” the complaint states.
“However, there is an undisclosed catch: Defendants have strict
participation limits that prohibit most consumers from participating in
their recycling programs.”

According to The Last Beach Cleanup, consumers purchase the products
believing they’ll be recyclable, free of charge, at end of life. But they
often “find out after purchasing the products that participation in
Defendants’ free recycling programs are closed,” the lawsuit states.

Instead, consumers are offered options that come with a cost, and many
consumers ultimately throw away the packaging, according to the lawsuit.

“Worse yet, some consumers instead discard the packaging into their
curbside recycling bins, thereby contaminating legitimate recycling streams
with unrecyclable materials and increasing costs for municipalities,” the
lawsuit stated.

The suit adds that TerraCycle and its brand owner customers “are reaping
the rewards of portraying themselves as environmentally friendly without
providing any meaningful benefit to the environment or to consumers
concerned about sustainability.”

The lawsuit alleges the labels constitute multiple violations of California
Business & Professions Code based on “unfair acts and practices,” and it
asks the court to prohibit the defendants from using such labels.

The defendants have not yet responded to the suit in court, although many
of them have been served with notice of the case in the months since it was
filed.
Labels do not guarantee free recycling

Szaky, TerraCycle’s CEO, discussed the company’s labeling and mail-in
collection program access in a July 26 interview.

He described the process TerraCycle and its customers employ to set up
collection programs. Customers set a budget limit, and based on that budget
TerraCycle develops that product’s collection program to be a certain size,
with a certain number of “collection points.”

Sometimes a free collection option will reach its budget cap, and consumers
looking to recycle a product will be directed to alternative programs,
Szaky noted. These caps “only last for a little period of time anyway,” he
said.

There are frequently free alternative programs available, he added,
contrary to the lawsuit’s claim. As an example, Szaky pointed to the
TerraCycle program for recycling food pouches. There are nine participating
collection options for these products, at least four of which are free.

If all nine programs for food pouches became capped, a remaining option
would be TerraCycle’s “Zero Waste Box,” which consumers pay for.

“There’s always at least a choice available if the free program has hit a
temporary limit,” Szaky said.

Also of note, the TerraCycle labels do not guarantee free recycling
availability. On a Gerber package mentioned in the suit, for example, the
label states, “Recycle through Terracycle,” with the TerraCycle logo.
Labels on other products include, “Collect, send, recycle,” or similar
language.

TerraCycle’s recycling programs and labels are not likely to lead consumers
into believing the products are curbside recyclable, Szaky added.

“I do not believe the TerraCycle program is confusing to municipal
recycling,” Szaky said, adding that he feels the plastic resin
identification code is more confusing to individuals trying to determine
what is recyclable in a local program.

The Sponsored Waste Programs are, by far, the biggest money maker for
TerraCycle US. Financial filings show
<https://resource-recycling.com/recycling/2021/05/25/how-covid-19-affected-terracycle-uss-bottom-line/>
that
brand owners paid TerraCycle US $10.5 million in 2020 through the Sponsored
Waste Programs, and TerraCycle’s income before taxes within that division
was $3.3 million.

The Zero Waste Box program was the second-biggest money maker, bringing in
$7.5 million in net sales and $1.8 in income before taxes in 2020.
Process and recycling assurance

The lawsuit also casts doubt over how TerraCycle products are recycled once
they are sent in through the collection program. The lawsuit says “it is
unclear whether the products are actually recycled,” and it asserts
TerraCycle is “at best recycling only a few thousand products per year.”

Noting he was not responding specifically to the lawsuit, Szaky described
the company’s process and verification that the products are recycled.

Waste products sent in through TerraCycle’s collection programs go to a
TerraCycle facility either operated by the company or a third-party
operator. The material comes in and is checked in and weighed, baled, and
shipped to third-party processors. TerraCycle pays these processors to
toll-process the material, and TerraCycle then sells the resulting
commodities.

“Sometimes we find the end markets for the material, if they can’t, and in
some cases the processor finds the end market,” Szaky said. The processor
contractually agrees that everything it receives from TerraCycle is
recycled.

TerraCycle US’s financial filings show recovered commodity sales (mostly
plastics) generated $1.4 million for the company in 2020. That recovered
commodity sales program lost money last year, however, with income before
taxes of negative $1.1 million. The reports filed with the Securities and
Exchange Commission do not indicate the weight of material recycled each
year.

Szaky described the verification process the company uses to ensure
materials are ultimately recycled.

“First and foremost, it’s our entire reputation, all of our clients who are
the biggest companies in the world, they are contracting with us to carry
out a promise,” he said. Such major customers hold TerraCycle accountable,
he said.

“We legally guarantee, in all of our contracts, recycling,” Szaky
explained. The company provides certification of recycling documentation to
all of its customers, he said. He compared TerraCycle’s guarantee to the
assurance a municipal recycling program can provide that all collected
materials are recycled. A MRF can’t necessarily guarantee how much paper
will be fully recycled at the paper mill or which plastics from a 3-7 bale
will be recovered at a reclaimer.

“That’s not to put down municipal MRFs,” Szaky said. “It’s just to say,
‘Let’s compare ourselves to what else is out there, and what are the
standards.'”




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