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Sodium lauryl sulfate is the victim of an urban myth similar to the one that haunts parabens. It is accused of causing cancer. This is false. However, there may be other reasons to avoid sodium lauryl sulfate and even its gentler sister, sodium laureth sulfate.
First of all what is it? Sodium lauryl sulfate is a detergent. As well as cleansing, it makes foam. Hence, it is frequently used as the base for shampoos, soaps and toothpaste.
Although studies specifically cleared sodium lauryl sulfate of being carcinogenic, it has been established that it can cause severe epidermal changes to the area where it is applied that, theoretically, could increase the chances of cancer.
If you have the suspicion that washing your face is making your skin dry, or that shampooing is giving you an itchy scalp or making your eyes sting, or that cleaning your teeth is giving you mouth ulcers, sodium lauryl sulfate is the likely culprit. In studies, there are "significant correlations" (in the words of one) between SLS and contact dermatitis. The Journal of the American College of Toxicology says that it has "a degenerative effect on the cell membranes because of its protein denaturing properties." The Journal adds that "low levels of skin penetration may occur at high use concentration." (read an abstract here)
Worryingly, tests on young animals showed permanent eye damage — even when the SLS was applied to areas other than the eye. No wonder shampooing can sting the eyes. In fact, SLS (which is an anionic detergent) is frequently combined with cocamide MEA and DEA (inonics) that are believed to anesthetize the eyeball so that you are less likely to be aware of the harm the lauryl sulfate is doing. What's more, cocamide DEA is pretty awful as well. Ironically, it has been definitively linked to cancer.
Laureth sulfate is less likely to cause these side-effects because it doesn't denaturate (change the structure) of proteins, unlike lauryl. Nevertheless, in Germany, a product cannot be labeled 'natural' if it contains any members of the sulfate family (lauryl, laureth, or ammonium).
The cosmetic trade industry association, the CIR, says that sulfates "appear to be safe in formulations designed for discontinous, brief use followed by thorough rinsing from the surface of the skin." Call me picky, but having to remove a product as quickly and thoroughly as possible because otherwise it is hazardous, does not endear me to it.