No, it is not true. You may label your food "GMO-free" if you wish.
Many "organic" sites claim that the FDA is restricting them from labeling their food as "GMO-free."
Notable for companies wanting to advertise products as non-genetically modified is the fact that the FDA says it will not allow labels like "GM-free," "GMO-Free" or "biotech-free."
This website points to these FDA documents.
- Docket No. 00N-1396, CFSAN 74. "Premarket Notice Concerning Bioengineered Foods."
- Docket No. 00D-1598, CFSAN 123. "Draft Guidance for Industry: Voluntary Labeling Indicating Whether Foods Have or Have Not Been Developed Using Bioengineering; Availability."
I am going to focus on the latter, because the former has little to do with Bioengineered food labeling. The words in the title that should stick out to you is Voluntary Labeling.
This draft guidance represents FDA's current thinking on voluntary labeling of foods indicating whether foods have or have not been developed using bioengineering. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public.
The agency is providing the following guidance to assist manufacturers who wish to voluntarily label their foods as being made with or without the use of bioengineered ingredients.
and the text goes on to say:
Terms that are frequently mentioned in discussions about labeling foods with respect to bioengineering include "GMO free" and "GM free." "GMO" is an acronym for "genetically modified organism" and "GM" means "genetically modified." [...]
Terms like "not genetically modified" and "GMO free," that include the word "modified" are not technically accurate unless they are clearly in a context that refers to bioengineering technology. "Genetic modification" means the alteration of the genotype of a plant using any technique, new or traditional. [...] Most, if not all, cultivated food crops have been genetically modified.
FDA recognizes that there are analytical methods capable of detecting low levels of some bioengineered materials in some foods, but a threshold would require methods to test for a wide range of genetic changes at very low levels in a wide variety of foods. Such test methods are not available at this time. The agency suggests that the term "free" either not be used in bioengineering label statements or that it be in a context that makes clear that a zero level of bioengineered material is not implied.
So, the FDA is advising, not forcing food manufactures not to use the "GMO-free" label, because it might be misleading to consumers. There currently is an organization that offers a similar label, Non-GMO product verified, but even they admit:
Are products bearing the “Non-GMO Project Verified” seal GMO free? - Unfortunately, “GMO free” and similar claims are not legally or scientifically defensible due to limitations of testing methodology. In addition, the risk of contamination to seeds, crops, ingredients and products is too high to reliably claim that a product is “GMO free.” The Project’s claim offers a true statement acknowledging the reality of contamination risk, but assuring the shopper that the product in question is in compliance with the Project’s rigorous standard. The website url is included as part of the Seal to ensure that there is transparency for consumers who want to learn more about our verification. While the Non-GMO Project’s verification seal is not a “GMO free” claim, it is trustworthy, defensible, transparent, and North America’s only independent verification for products made according to best practices for GMO avoidance.
The last part is lawyer speak, and is why they can get away with using the "Non-GMO Project Verified" seal. (similar to how Quik can get away with, "100% real chocolate flavor")