My gut feeling is this should be illegal. It's something like false advertising.

It should also be illegal when municipalities do it.

Just because the city offers a recycling pickup, doesn't mean most of it actually gets recycled.

It is questionable, I assume they are using standard corporate products and our local rural-ish area does not have very good options.

Most recycling in retail contexts is pure theater either way, so why expend the effort to actually separate streams that will inevitable be combined later.