Keurig Dr Pepper is being sued by the SEC for false advertising regarding the recyclability of K-Cups.

• Keurig Dr Pepper has been accused by the Securities and Exchange Commission of making false statements regarding the recyclability of its K-Cups.
• The beverage giant was revealed to have failed to disclose that two major U.S. recyclers had refused to accept their pods for recycling, according to the agency.
• Keurig has agreed to pay a $1.5 million civil penalty without admitting or denying the allegations.

The Securities and Exchange Commission accused Keurig Dr Pepper of making false claims about the recyclability of its K-Cup pods, the company announced on Tuesday.

Keurig has agreed to pay a $1.5 million civil penalty without admitting or denying the allegations.

Over the past decade, Keurig has faced criticism about the environmental impact of its K-Cups, with concerns about waste and recycling. The inventor of the pods has expressed regret about their creation, and a 2018 lawsuit resulted in a $10 million class-action settlement. However, by the end of 2020, K-Cups became fully recyclable, according to the company.

Before reaching the milestone, the company had already informed investors that the pods could be recycled.

Keurig reported in its annual reports for fiscal 2019 and 2020 that K-Cups could be effectively recycled through testing with recycling facilities. However, the SEC stated that the company failed to disclose that two of the largest U.S. recyclers did not intend to accept the disposable coffee pods for recycling and had expressed significant concerns about the financial viability of recycling K-Cups collected curbside.

The company's claims could have influenced some consumers to purchase K-Cups and brewers. A Keurig subsidiary's earlier research revealed that environmental concerns were a significant factor that some shoppers considered when buying a Keurig coffee machine, as stated in the SEC.

Nearly a quarter of Keurig's revenue in the fiscal second quarter came from sales of K-Cup pods and the company's brewing systems, as stated in a company filing.

A company spokesperson stated that they were pleased to have reached a fully resolving agreement on the matter.

"Our K-Cup pods are made from recyclable polypropylene plastic (#5 plastic), which is widely accepted in curbside recycling systems across North America. However, we encourage consumers to check with their local recycling program to verify acceptance of pods, as they are not recycled in many communities. We remain committed to a better, more standardized recycling system for all packaging materials through KDP actions, collaboration, and smart policy solutions."