False advertising is the use of misleading, false, or unproven information to advertise products to consumers or advertising that does not disclose its source. One form of false advertising is to claim that a product has a health benefit or contains vitamins or minerals that it in fact does not. Many governments use regulations to control false advertising. A false advertisement can further be classified as deceptive if the advertiser deliberately misleads the consumer, as opposed to making an honest mistake.
Types of deception
Often used in cosmetic and weight losscommercials,  these adverts portray false and unobtainable results to the consumer and give a false impression of the product's true capabilities. If retouching is not discovered or fixed, a company can be at a competitive advantage with consumers purchasing their seemingly more effective product, thus leaving competitors at a loss.
Advertisers for weight loss products may also employ athletes who are recovering from injuries for "before and after" demonstrations.
An ad may omit or skim over important information. The ad's claims may be technically true, but the ad does not include information that a reasonable person would consider relevant. For example, TV advertisements for prescription drugs may technically fulfil a regulatory requirement by displaying side-effects in a small font at the end of the ad, or have a "speed-talker" list them. This practice was prevalent in the United States in the recent past.
Hidden fees and surcharges
Hidden fees can be a way for companies to trick the unwary consumer into paying excess fees (for example tax, shipping fees, insurance etc.) on a product that was advertised at a specific price as a way to increase profit without raising the price on the actual item.
A common form of hidden fees and surcharges is “fine print” in advertising. Another way to hide fees that is commonly used is to not include “shipping fees” into the price of goods online. This makes an item look cheaper than it is once the shipping cost is added.
Manipulation of measurement units and standards
Manipulation of measurement units and standards can be described as a seller deceiving customers by informing them with facts that either are not true or are using a standard or standards that wouldn’t be widely used or understood which results in the customer being misinformed or confused.
- Breen, James O. (2014). "Personal Statement to Personal Physician:Bait and Switch?". Hastings Center Report. 44 (2): 25–7. doi:10.1002/hast.291. PMID 24634045.
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- Gardner, D. M. (1975). Deception in Advertising: A Conceptual Approach. Journal of Marketing, 39(1), 40-46.
- West, J. K. (2016). Bait and Switch. Podiatry Management, 35(3), 32-32 1/4p.
- International Chamber of Commerce, Consolidated ICC Code of Advertising and Marketing Communication Practice, 2011.
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- Schwarz, N.(2010). Feelings as information theory. University of Michigan. Retrieved from https://dornsife.usc.edu/assets/sites/780/docs/schwarz_feelings-as-information_7jan10.pdf
- Latour, K., & M (2009). Positive mood and susceptibility to false advertising. The Scholarly Commons. Cornell University School of Hotel Administration. Retrieved from http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1312&context=articles
- Calvert, S. (2008). Children as consumers: Advertising and marketing. Retrieved from https://www.princeton.edu/futureofchildren/publications/docs/18_01_09.pdf
- Blackbird, J., Fox, T., & Tornetta, S. (2013). Color sells: how the psychology of color influences consumers. Archived https://web.archive.org/web/20160418195859/http://udel.edu/~rworley/e412/Psyc_of_color_final_paper.pdf
- Meat products with high levels of extenders and fillers. (n.d). Retrieved from []
Fillers and oversized packaging
Some products are sold with fillers, which increase the legal weight of the product with something that costs the producer very little compared to what the consumer thinks that he or she is buying. Food is an example of this, where meat is injected with broth or even brine (up to 15%), or TV dinners are filled with gravy or other sauce instead of meat. Malt and ham have been used as filler in peanut butter. There are also non-meat fillers which may look starchy in their makeup; they are high in carbohydrate and low in nutritional value. One example is known as a cereal binder and usually contains some combination of flours and oatmeal.
Some products may have a large container where most of the space is empty, leading the consumer to believe that the total amount of food is greater than it actually is.
Misleading health claims
The words “Diet, low fat, sugar-free, healthy and good for you” are labels they may see every day and they associate these labels with products that will aid a healthy lifestyle. It seems advertisers are aware of their needs to live longer and live well so they are adapting their products in accordance with this. It is suggested that food advertising influences consumer preferences and shopping habits. Therefore, by highlighting certain contents or ingredients is misleading consumers into thinking they are buying healthy when in fact they are not.
Many large food companies are going to court after using misleading tactics like these:
- Using a tick panel above the nutritional label and using large, bold font and brighter colors.
- Highlighting one healthy ingredient on the front of the packet with a big tick next to it.
- Using words like healthy and natural which are weasel claims – words that contradict the claims that may follow it. These are commonly used words where the meaning can be overlooked by consumers.
- Using words like help on the product labeling, misleading consumers into thinking it ‘will’ help.
However, this is not always the case. There has been an increase in the number of large organizations going to court over misleading claims, stating that products are ‘school canteen approved’ or ‘all natural,’ hence claiming their products are healthy or only uses natural ingredients, but this is not always the case.
Puffing or puffery is the act of exaggerating a product's worth through the use of meaningless unsubstantiated terms, based on opinion rather than fact. Examples of this include many superlatives and statements such as “greatest of all time”, “best in town” and “out of this world” or a restaurant claiming it had "the world’s best tasting food".
Typically puffing is not an illegal form of false advertising and can be looked at as a humorous way to grab and attract the attention of the consumer. Puffing may be able to be used as a defense against charges of deceptive advertising when it is formatted as an opinion rather than a fact.
However, it can also be used as a defense for misleading or deceptive advertising. For example, claims like ‘Top Quality’ can have regulatory and legal consequences and can be looked at as illegal misrepresentation, if not supported through the products capabilities.
Manipulation of terms
Many terms have imprecise meanings. Depending on the jurisdiction, "organic" food may not have a clear legal definition, and "light" food has been variously used to mean low in calories, sugars, carbohydrates, salt, texture, viscosity, or even light in color. Labels such as "all-natural" are frequently used but are essentially meaningless in a legal sense.
Statements and terms like recyclable, biodegradable and environmentally friendly need[opinion] to be evaluated by reliable scientific evidence.
Tobacco companies, for many years,[when?] used terms like low tar, light, ultra-light and mild in order to imply that products with such labels had less detrimental effects on health, but in recent years[when?] the United States has banned manufacturers from labeling tobacco products with these terms.
When the US United Egg Producers' used an "Animal Care Certified" logo on egg cartons, the Better Business Bureau argued that it misled consumers by conveying a higher sense of animal care than was actually the case.
In 2010, Kellogg's Rice Krispies cereal claimed that the cereal can improve a child’s immunity. The company was forced to discontinue all advertising stating such claims. In 2015 the same company advertised their Kashi product as “all natural”, when it contained a variety of synthetic and artificial ingredients. Kashi paid $5 million to resolve the issue.
Main article: Incomplete comparison
"Better" means one item is superior to another in some way, while "best" means it is superior to all others in some way. However, advertisers frequently fail to list the way in each they are being compared (price, size, quality, etc.) and, in the case of "better", to what they are comparing (a competitor's product, an earlier version of their own product, or nothing at all). So, without defining how they are using the terms better and best, the terms become meaningless. An ad which claims "Our cold medicine is better" could be just saying it is an improvement over taking nothing at all. Another often-seen example of this ploy is "better than the leading brand" often with some statistic attached, while the leading brand is often left undefined.
Main article: Inconsistent comparison
In an inconsistent comparison, an item is compared with many others, but only compared with each on the attributes where it wins, leaving the false impression that it is the best of all products, in all ways. One variation on this theme is web sites which also list some competitor prices for any given search, but do not list those competitors which beat their price (or the web site might compare their own sale prices with the regular prices offered by their competitors).
One common example is that of serving suggestion pictures on food product boxes, which show additional ingredients beyond those included in the package. Although the "serving suggestion" disclaimer is a legal requirement of an illustration which includes items not included in the purchase, if a customer fails to notice or understand this caption, they may incorrectly assume that all depicted items are all included.
In some advertised images of hamburgers, every ingredient is visible from the side shown in the advertisement, giving the impression that they are larger than they really are. Products which are sold unassembled or unfinished may also have a picture of the finished product, without a corresponding picture of what the customer is actually buying.
Commercials for certain video games include trailers that are essentially CGI short-films - with graphics of a much higher caliber than the actual game.
“The color of food packaging is considered to be extremely important in the marketing world” (Blackbird, Fox & Tornetta, 2013) as people see color before they absorb anything else. Consumers buy items based on the color they’ve seen it on the advertisement and they have a perception of what the packaging colors should also look like. However, when it comes to buying food, usually consumers can only judge the product based on the packaging and usually consumers judge products based on color.
When used to make people think food is riper, fresher, or otherwise healthier than it really is, food coloring can be a form of deception. When combined with added sugar or corn syrup, bright colors give the subconscious impression of healthy, ripe fruit, full of antioxidants and phytochemicals.
One variation is packaging which obscures the true color of the foods contained within, such as red mesh bags containing yellow oranges or grapefruit, which then appear to be a ripe orange or red. Regularly stirring minced meat on sale at a deli can also make the meat on the surface stay red, causing it to appear fresh, while it would quickly oxidize and brown, showing its true age, if left unstirred. Some sodas are also sold in colored bottles, when the actual product is clear.
Angel dusting is a process where an ingredient which would be beneficial, in a reasonable quantity, is instead added in an insignificant quantity which will have no consumer benefit, so they can make the claim that it contains that ingredient, and mislead the consumer into expecting that they will gain the benefit. For example, a cereal may claim it contains "12 essential vitamins and minerals", but the amounts of each may be only 1% or less of the Reference Daily Intake, providing virtually no benefit to nutrition.
Main article: Chemical free
Many products come with some form of the statement "chemical free!" or "no chemicals!". As everything on Earth, save a few elementary particles formed by radioactive decay or present in minute quantities from solar wind and sunlight, is made of chemicals, it is impossible to have a chemical free product. The intention of this message is often to indicate the product contains no synthetic or exceptionally harmful chemicals, but as the word chemical itself has a stigma, it is often used without clarification.
Main article: Bait-and-switch
Bait-and-switch is a deceptive form of advertising or marketing tactic generally used to lure in customers into the store. A company will advertise their product at a very cheap and enticing price which will attract the customers. Once they do, the store/company will then try to sell something that is more expensive and valuable than what they originally advertised. Regardless of the fact that only a small percentage of the shoppers will actually buy the more expensive product, the advertiser using the bait remains to gain profit.
Bait advertising is also commonly used in other contexts, for example, in online job advertisements by deceiving the potential candidate about working conditions, pay, or different variables. Airlines may be guilty of "baiting" their potential clients with a bargains, then increase the cost or change the notice to be that of a considerably more costly flight.
Businesses are asked to remember a few guidelines to avoid charges of misleading or deceptive conduct:
- Reasonable timeframe, reasonable quantities - Businesses must supply publicized merchandise or services at the promoted cost for a sensible or expressed timeframe and in sensible or expressed amounts. There is no exact meaning of what is implied by a 'sensible timeframe' or 'sensible amounts'.
- Qualifying statements - General qualifying statements, for example, 'in store and online now' could at present still leave a business open to charges of bait advertising if sensible amounts of the publicized item are not accessible.
- Advertising deadlines - Companies need to have good grounds to trust that the merchandise will be accessible
- Rain checks - When, through no shortcoming of its own, a business can't supply merchandise or services as promoted companies ought to have a framework set up to supply or acquire the supply of the merchandise or benefits at the promoted cost as quickly as time permits.
- Online claims - If a company is an online-based company, it is essential for them to keep everything on their website updated to avoid misleading customers.
In some countries bait advertising can result in severe penalties.
Guarantee without a remedy specified
If a company does not say what they will do if the product fails to meet expectations, then they are free to do very little. This is due to a legal technicality that states that a contract cannot be enforced unless it provides a basis not only for determining a breach but also for giving a remedy in the event of a breach.
Advertisers frequently claim there is no risk to trying their product, when clearly there is. For example, they may charge the customer's credit card for the product, offering a full refund if not satisfied. However, the risks of such an offer are numerous. Customers may not get the product at all, they may be billed for things they did not want, they may need to call the company to authorize a return and be unable to do so, they may not be refunded the shipping and handling costs, or they may be responsible for the return shipping.
Similarly, a ‘free trial’ is an advertising manoeuvre to have consumers become hands-on with the products or services before purchase, without any money spent but a free trial in exchange for credit cards details cannot be stated as a free trial, as there is a component of expenditure.
Acceptance by default
This refers to a contract or agreement where no response is interpreted as a positive response in favor of the business. An example of this is where a customer must explicitly "opt out" of a particular feature or service, or be charged for that feature or service. Another example is where a subscription automatically renews unless the customer explicitly requests it to stop.
Regulation and enforcement
In the United States, the federal government regulates advertising through the Federal Trade Commission (FTC), and additionally enables private litigation through various statutes, most significantly the Lanham Act (trademark and unfair competition).
The goal is prevention rather than punishment, reflecting the purpose of civil law in setting things right rather than that of criminal law. The typical sanction is to order the advertiser to stop its illegal acts, or to include disclosure of additional information that serves to avoid the chance of deception. Corrective advertising may be mandated, but there are no fines or prison time except for the infrequent instances when an advertiser refuses to stop despite being ordered to do so.
In 2013 and 2014, the United States Supreme Court reviewed two false advertising cases: Static Control v. Lexmark (concerning who has standing to sue under the Lanham Act for false advertising) and POM Wonderful LLC v. Coca-Cola Co..
State governments have a variety of unfair competition laws, which regulate false advertising, trademarks, and related issues. Many are very similar to that of the FTC, and in many cases copied so closely that they are known as "Little FTC Acts."
In California, one such statute is the Unfair Competition Law (UCL). The UCL “borrows heavily from section 5 of the Federal Trade Commission Act” but has developed its own body of case law.
Advertising in the UK is managed under the Consumer Protection from Unfair Trading Regulations 2008 (CPR), effectively the successor to the Trade Descriptions Act 1968. It is designed to implement the Unfair Commercial Practices Directive, part of a common set of European minimum standards for consumer protection and legally bind advertisers in England, Scotland, Wales and parts of Ireland. These regulations focus on business to consumer interactions. These are modelled by a table used for assessing unfairness, evaluations being made against four tests expressed in the regulations that indicate deceptive advertising:
- Contrary to the requirements of professional diligence
- False or deceptive practice in relation to a specific list of key factors
- Omission of material information (unclear or untimely information)
- Aggressive practice by harassment, coercion or undue influence
These factors of deceptive advertising are critically analysed as they may crucially impair a consumer's ability to make an informed decision, thereby limiting their freedom of choice.
This system resembles American practice as reflected by the FTC in terms of disallowing false and deceptive messaging, prohibition of unfair and unethical commercial practices and omitting important information, but it differs in monitoring aggressive sales practices (regulation seven) which included high-pressure sales practices that go beyond persuasion. Harassment and coercion are not defined but rather interpreted as any undue physical and psychological pressure (in advertising).
Even if proven cases of false advertising do not inevitably result in civil or criminal repercussions: the Office of Fair Trading states in the instance of false advertising, companies are not always faced with civil and criminal repercussions, it is based on the seriousness of the infringement and each case is analysed individually, allowing the standards authority to promote compliance with regards to their enforcement policies, priorities and available resources. Another area of departure from American practice relates to a general prohibition on the use of competitors' logotypes, trademarks or similar copy to that used in a competitor's own advertising by another, particularly when making a comparison.
Under CPR legislation, there are different standards authorities for each country:
In Australia, Australian Competition and Consumer Commission also known as the ACCC, are responsible for ensuring all businesses and consumers act in accordance with the Australian Competition & Consumer Act 2010, as well as, fair trade and consumer protection laws (ACCC, 2016).
Each state and territory have its own consumer protection agency or consumer affairs agency (ACCC 2016).
- ACT - Office of Fair Trading (OFT)
- NSW - Fair Trading
- Office of Fair Trading - Queensland
- SA - Office of Consumer and Business Services (CBS)
- Tasmanian - Consumer Affairs & Fair Trading
- Consumer Affairs - Victoria (CAV)
- WA - Department of Commerce
The ACCC is designed to assist both consumers, businesses, industries and infrastructure within the country. The ACCC assists the consumer by making available the rights, regulations, obligations and procedures; for refund and return, complaints, faulty products and guarantees of products and services. They also assist businesses and industries by developing clear laws and guidelines in relation to unfair practices and misleading or deceptive conduct.
There are many similarities in the laws and regulation between the Australian ACCC, the New Zealand FTA, the American FCT and United Kingdom CPR. The structure of these policies is to support fair trade and competition alongside offering the consumers exactly what they are selling, in order to reduce deceptive and false practices. However, it is not limited to these countries, as most countries have agreements with the International Consumer Protection and Enforcement Network or ICPEN.
Main article: Fair Trading Act 1986
In New Zealand, the Fair Trading Act 1986 aims to promote fair competition and trading in the country. The act prohibits certain conduct in trade, provides for the disclosure of information available to the consumer relating to the supply of goods and services and promotes product safety. Although the Act does not require businesses to provide all information to consumers in every circumstances, businesses are obliged to ensure the information they do provide is accurate, and important information is not kept from consumers.
A range of selling methods that intend to mislead the consumer are illegal under the Fair Trading Act: The Act also applies to certain activities whether or not the parties are 'in trade' – such as employment advertising, pyramid selling, and the supply of products covered by product safety and consumer information standards.
Both consumers and businesses alike can rely on and take their own legal action under the Act. Consumers may contact the trader and utilize their rights which have been stated in the Act to make headway with the trader. If the issues are not resolved, the consumer or anyone else can take actions under the Act. The Commerce Commission is also empowered to take enforcement action and will do so when allegations are sufficiently serious to meet its enforcement criteria.
Additionally, there are currently five consumer information standards:
- Country of Origin (Clothing and Footwear) Labeling – Regulations 1992
- Fibre Content Labeling - Regulations 2000
- Used Motor Vehicles - Regulations 2008
- Water Efficiency - Regulations 2010
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This post is in partnership with 24/7 Wall Street. The article below was originally published on247wallst.com.
Advertisements and packaging increase consumer awareness of a product and provide information so that customers can make educated choices. Oftentimes, however, marketing strategies are focused more on raising sales than providing accurate product information.
The Federal Trade Commission (FTC) handles numerous cases each year as part of its goal to protect consumers from unfair or deceptive practices. Last year, the FTC ruled that advertisements and packaging of various lines of clothing from a number of companies — including Sears, Amazon.com, and Macy’s — were misleading and unsubstantiated. In these cases, the companies marketed the products as environmentally friendly bamboo, when in fact the manufacturing process involved toxic chemicals.
This incident is one of a slew of recent confrontations companies have had with a number of groups. Regulators, customers and advocacy groups have especially targeted “all-natural” labelled foods. The growth in such labeling is not surprising given the spike in demand for so-called “natural” products in recent years. Other products under scrutiny have ranged from shoes to cars. Based on recent FTC and media reports, 24/7 Wall St. has reviewed the most misleading product claims.
Due to the high volume of litigations in recent years, the word “natural” is slowly disappearing from labels, despite the lucrative sales growths of products with this label. The Center for Science in the Public Interest (CSPI) is one consumer advocacy group that is at the forefront of lawsuits related to food, beverages and health.
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In an interview with 24/7 Wall St., Stephen Gardner, Litigation Director at CSPI, explained that food and health-related litigation probably get more media attention because “Americans are increasingly interested in eating [healthy foods].” The problem is that the terms used to identify healthy foods are often inconsistent or vague. Citric acid, for example, can be either natural or artificially produced, which means seeing it listed as an ingredient does not tell a consumer very much, Gardner explained.
Kashi, Emergen-C, and Kellogg’s Frosted Mini-Wheats all claimed to be healthier than they actually were. Kashi, which claims to be all all-natural, actually contains artificial ingredients. Emergen-C vitamin C supplement’s effectiveness at preventing or curing the common cold is controversial. Kellogg’s Frosted Mini-Wheats do not improve children’s attention span.
To make matters worse, information found on packaging is often unreliable. These strategies are anti-competitive, Gardner argued. “If people don’t want to buy food with high-fructose corn syrup, they shouldn’t be tricked into buying it.” Additionally, if you are a victim of deceptive practices, “You’re not getting what you paid for, and that’s a failure of the marketplace,” Gardner said.
24/7 Wall St. has identified the major government actions and private lawsuits directed at companies on the basis of deceptive practices or false advertising. In order to be considered, a product had to be involved in some major settlement since the start of last year. We excluded incidents that were related to services rather than specific products, such as cases of predatory lending.
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These are nine of the most misleading product claims.
1. Sears’ Bamboo fabric
> Parent Company: Sears
> Ad changed: yes
> Settlement Amount: $475,000
Sears Holdings agreed to pay $475,000 and remove false advertising from its line of “100% pure bamboo” products, which were anything but. Sears was the find the most out of several large companies, including Amazon.com and Macy’s, that agreed to pay fines totaling nearly $1.3 million for violating for violating the Textile Products Identification Act last year. The FTC charged the companies for labelling clothing products as made of bamboo, when they were actually made of rayon. While using bamboo to make clothing is arguably “green,” rayon — a synthetic cellulose fiber — is manufactured using toxic chemicals in a process known for its hazardous byproducts, the FTC noted. These companies had previously received warnings from the FTC in 2010 but did not alter their marketing strategies until last year, when the settlement was reached.
2. Vibram FiveFinger
> Parent Company: Vibram USA
> Ad changed: Yes
> Settlement Amount: $3.75 million
So-called minimalist running gear has gained popularity in recent years, most notably the Vibram FiveFinger shoe, a close-fitting mimicry of the bare foot. The FiveFinger shoe’s initial reception was lukewarm. The glove-like shoe was simply too weird for many Americans.Since then, the market for minimalist shoes has boomed, due in part to the success of author Christopher McDougall’s best-selling book, “Born to Run,” which touted the benefits and freedom of barefoot running.While the best-selling book did not explicitly endorse FiveFinger shoes, Vibram sales soared after the book was released in 2009. However, following a recent settlement, Vibram has agreed to stop making any claims that its shoes strengthen muscles or prevent injuries, and has agreed to refund customers who bought its shoes. In its settlement, the company noted “Vibram expressly denied and continues to deny any wrongdoing alleged in the Actions, and neither admits nor concedes any actual or potential fault, wrongdoing or liability”
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3. Kellogg’s Frosted Mini-Wheats
> Parent Company: Kellogg
> Ad changed: Yes
> Settlement Amount: $4 million
Approximately five years ago, Kellogg claimed that “Eating a bowl of Kellogg’s Frosted Mini-Wheats cereal for breakfast is clinically shown to improve attentiveness by nearly 20%.” While Kellogg did not admit to false advertising, it did create a $4 million fund last year to reimburse misled customers who bought the cereal between January 2008 and October 2009. The agreement was part of a settlement in a class-action lawsuit charging Kellogg with false advertising. The company settled similar accusations in the past, when the FTC charged Kellogg with misleading health claims on its Rice Krispies cereal. Cereal boxes at that time claimed the food would boost immunity and provide essential portions of healthy nutrients.
> Parent Company: Snapchat
> Ad changed: Yes
> Settlement Amount: N/A
Snapchat is a smartphone application designed to send disappearing photos, or “snaps,” to friends. The FTC, however, charged the company for misleading consumers into believing the photos would actually disappear forever, when there are actually a number of simple ways to preserve the snaps. The FTC also accused the company of misrepresenting the extent to which it collected personal information, including geolocation data. This is not the first misstep for the company. Earlier this year, Snapchat leaked the phone numbers and names of millions of users. The incident was particularly embarrassing for the company as it dismissed a security warning it received shortly before the leak. In January, Snapchat finally apologized for the fiasco, detailing how it would prevent further abuse of its application.
> Parent Company: Kellogg
> Ad changed: Yes
> Settlement Amount: $5 million
Earlier this month, Kellogg agreed to stop including terms such as “nothing artificial” and “all natural” on its Kashi brand of products. The agreement was part of a $5 million settlement filed at the beginning of May. The class action lawsuit accused Kellogg of misleading its customers with claims that its Kashi line of cereal contained “all natural” ingredients. The FDA currently has a vague definition of the term “natural.” According to the FDA, “From a food science perspective, it is difficult to define a food product that is ‘natural’ because the food has probably been processed and is no longer the product of the earth.” Kashi cereal contains pyridoxine hydrochloride, calcium pantothenate, and hexane-processed soy. According to The New York Times, “such ingredients do occur naturally,” but food companies often use synthetic versions of the ingredients.
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