Purchasing clean recycled wood from species that are friendly to flowers and trees is not a bad practice.
The problem comes from mulch made of ground pallets and packing material that hauled such things as pesticides, industrial metals, machinery leaking oil, and industrial additives. A common practice is to hide recycled material by dying the wood. Most of this material could not be sold if dye was not added. Ground up pallets are not appealing to most people.
No law requires mulch manufactures to identify recycled material. Some manufacturers use recycled material to reduce the cost. If a manufacturer is paid to take material such as ground up demolition material, it reduces the cost of production. In fact, the harder it is to dispose of contaminated wood, the more the owner has to pay for disposal.
The more a mulch manufacturer is paid to take wood, the cheaper they can sell the mulch.
This makes those mulch manufacturers more competitive when bidding on large contracts that are decided by price. Those retailers using price as the main criteria for selecting suppliers are the most vulnerable to contaminated material.