Jessica Alba’s Honest Company have agreed to pay $1.55 million to customers.
The eco-friendly brand – which is worth an estimated $1 billion – have decided to settle a class action lawsuit, which was brought for "deceptively and misleadingly" labelling products as natural, even though they maintain the accusations are false.
The firm had denied their laundry detergent, dish soap and multi-surface cleaner did not contain Sodium Lauryl Sulfate (SLS), which can cause rashes, as they opted instead for the "gentler alternative" Sodium Coco Sulfate (SCS), but the plaintiffs noted SLS is a component of SCS.
As a result, the 36-year-old beauty has agreed to pay customers back or give them credit against future purchases as part of a settlement.
While the Honest Company still "vigorously deny" the allegations against them, they felt it was best to settle the case against them.
They said in a statement given to DailyMail.com: "We vigorously deny any and all allegations alleged in the lawsuit – specifically that any of our cleaning products contain SLS.
"However, given the fact that continued litigation could be protracted and expensive, we have settled this lawsuit to limit further costs and distraction to our business.
"We stand behind the safety and effectiveness of our products and the responsibility we have to our consumers, and are gratified by the loyalty of both our customers and retail partners."
Jessica – who has daughters Honor, nine, and Haven, seven, with husband Cash Warren – previously defended her brand against the claims.
She said: "I started The Honest Company to develop safe and effective products not just for my children, but for families everywhere. I am very proud that we have built this company into an industry leader focused on using natural ingredients and developing products that people love.
"I know my children, Honor and Haven, are growing up in a safer home because of our products.
"The allegations against us are baseless and without merit. We strongly stand behind our products and the responsibility we have to our consumers. We are steadfast in our commitment to transparency and openness."