From Lawsuits to a Recall: More Growing Pains for Jessica Alba’s Billion-Dollar Honest Empire

By Industries FOXBusiness

NEW YORK, NY - JANUARY 17: Jessica Alba attends the Jessica Alba Launches Honest.com party at ABC Kitchen on January 17, 2012 in New York City. (Photo by Theo Wargo/Getty Images for Honest.com) (2012 Getty Images)

Hollywood actress Jessica Alba’s Honest Company seemed to be well on its way to becoming a consumer goods empire.

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In 2015, the starlet made the cover of Forbes for creating a billion-dollar company – which today is valued at $1.7 billion – that focuses on non-toxic, organic products. And she did it in just six years, which is something that attracted the attention of big corporations like Unilever and Proctor & Gamble. The two corporate giants were reportedly in talks to acquire Honest last year

But along with the fast growth came growing pains –and they keep coming. After facing lawsuits over some of the ingredients used in its products, this week Honest Company announced a recall of its organic baby powder due to concerns it may cause skin irritation. One brand expert said even if the company is out in front of the complaint this time, it’s not good for business.

“From falsely labeled as organic to a full-blown product recall, consumers have complained on social media widely about issues with the Honest companies products,” Kris Ruby, a brand expert and founder of Ruby Media Group, told FOXBusiness.com. “When customers sense the disconnect of what they were led to believe vs. the amount of product lawsuits they are now seeing, that absolutely tarnishes the long term-brand equity in Alba’s brand.”

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An Honest Company spokeswoman said it recalled its baby powder out of an “abundance of caution,” but did not immediately comment on the prior product snafus.  

“The Honest Company’s products are regularly tested to ensure their safety and quality,” the company said in a statement.

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In 2015, three years after the company began selling products, it was hit with its first class-action lawsuit seeking $5 million in damages for false advertising and causing physical harm to customers, who claimed their Honest Sunscreen SPF 30 made them suffer from severe burns and was ineffective. At the time, Honest released a statement saying its sunscreen was tested by an independent third party and it planned to “make things right.” The suit is still ongoing.

Last year, the company was hit with three more lawsuits. One suit, involving laundry detergent, was filed after a Wall Street Journal investigation found sodium laurel sulfate (SLS), an ingredient that claims to “cause health problems for some,” in the company’s “honestly free” laundry detergent. The lawsuit claims the company falsely advertises its products. Honest later released a statement saying that the WSJ report was false, and that they use Sodium Coco Sulfate (SCS), not SLS like the report claimed.

A month later, the company’s conditioning detangler and shampoo & body wash ended up in another lawsuit that alleged the products actually contained synthetic and toxic ingredients – even though its advertising claimed “no harsh chemicals.”

And last spring, the Organic Consumers Association filed a suit alleging that Honest’s Organic Infant Formula is “in fact is not organic.” The suit alleges that 11 ingredients found in the formula violated the California Organic Products Act of 2003. The case was later dismissed but the Organic Consumers Association told FOXBusiness.com that it was appealing that decision.

“We believe that on appeal, we will show that products in question do in fact violate USDA organic standards, and therefore the company's use of the ‘organic’ label is deceptive. Consumers expect all products labeled ‘USDA Organic’ to adhere to organic standards,” the organization said. “The Honest Co.'s infant formula, as the lawsuit clearly states, contains substances that are prohibited under those standards.”

Earlier this week, the company issued a voluntary recall for all bottles of its organic baby power that has been sold in the United States following concerns it caused eye and skin infections. The company said the decision was reached after recent tests detected possible contaminations from microorganisms that could cause infections.

Karen Post, author of the book “Brand Turnaround,” said the voluntary recall is actually a good sign for Alba’s company.

“As long as she and her company leaders demonstrate they are responding responsibly to a product recall, she and they can manage through this,” Post told FOXBusiness.com. “Today, the public is very used to good companies getting hit with bad events that are often out of their direct control.”

Branding expert Kait LeDonne agrees. She said Alba created the company because she genuinely wanted to see “a world that was safer for children and free of harsh ingredients.”

“Sure, they have experienced a few issues, and they will weather them like any company presented with setbacks,” LeDonne said. “Had her purpose in starting the Honest Company been just another way to increase her brand equity, these issues may be detrimental to her brand. However, since I don't believe her own brand equity was the driving force behind starting Honest, I think her brand will come out stronger and ultimately be just fine.”