October 4, 2012
By Josh Long, Legal and Regulatory Editor
WASHINGTON The 20-year-old "Green Guides" have been revised yet again, reflecting continuing efforts by the FTC to ensure marketers are making truthful and substantiated marketing claims related to the environment.
The FTC has advised marketers to avoid making sweeping claims like "green" or "eco-friendly" that cannot be substantiated.
Although the guides are 36 pages long, they reflect a simple concept that consumers can appreciate: when making an environmental marketing claim, companies should be honest, specific and have a reasonable basis for their assertions.
"Marketers must ensure that all reasonable interpretations of their claims are truthful, not misleading, and supported by a reasonable basis before they make the claims," FTC states. "In the context of environmental marketing claims, a reasonable basis often requires competent and reliable scientific evidence."
The commission provided various concrete examples to distinguish acceptable claims from those that would be deemed deceptive under federal law. For instance, a soft drink bottle that is labeled "recycled" would not be deceptive if all but the bottle cap had been made of recycled material. By contrast, a plastic package containing a new shower curtain that is labeled "recyclable" without further elaboration would be deceptive if either the package or curtain other than a minor component couldn't be recycled.
FTC has clarified the guides apply to both consumer interactions and business-to-business transactions since the commission has authority under federal law to prevent unfair or deceptive practices in cases against businesses where the victim is a business as well.
Among other things, the new guides feature information on certification and seals of approval. Under the new guides, if a company is relying on its own certification rather than that of a third party, it should make that fact explicit, lawyers say. FTC further advises that "marketers should use clear and prominent qualifying language that clearly conveys that the certification or seal refers only to specific and limited benefits."
The revised guides also feature new sections on a variety of additional categories, including: carbon offsets; free-of claims; non-toxic claims; made with renewable energy claims; and made with renewal materials claims.
Companies had been waiting for what seemed like an eternity for the agency to adopt the revised guides; the draft guides were issued in 2010.
First adopted in 1992 and later revised in both 1996 and 1998, the guides don't carry with them the force and effect of law. However, the commission can take enforcement action under the FTC Act if a marketer makes an environmental claim that is inconsistent with the guides. The burden falls on the FTC to show the act or practice was deceptive or unfair.
"The FTC wants you to be as specific as possible about your claim," said Justin Prochnow, a Denver-based shareholder with the international law firm of Greenberg Traurig, LLP. For instance, "You have to let the consumer know how your product is greener or eco-friendly instead of just making the bald assertion that it is eco-friendly."
Section 5 of the FTC Act bars "unfair deceptive acts or practices in or affecting commerce", and the commission has invoked the statute in recent years to target companies accused of deceptive environmental claims.
Three years ago, for instance, FTC charged Kmart Corp., Tender Corp. and Dyna-E International with making false and unsubstantiated claims that their paper products were "biodegradable". The FTC said Kmart, Tender and Dyna-E all reached settlement agreements that barred them "from making deceptive 'biodegradable" product claims and required" them "to support all other environmental product claims with competent and reliable evidence."
Joseph Eckhardt, a Portland, Ore.-based attorney practicing in the Technology and Intellectual Property group of Stoel Rives, LLP, a national law firm, said FDA's record on enforcement in this area has been "pretty light".
"We really haven't seen that much enforcement," he said, though Eckhardt noted there likely have been private FDA investigations into environmental marketing claims.
Prochnow of Greenberg Traurig isn't surprised that enforcement has been light.
A primary concern at many regulatory agencies is consumer safety, which is an issue that rarely is related to environmental marketing claims, he said.
Still, Prochnow thinks the Green Guides could open the door for plaintiff's attorneys to file civil lawsuits. While there is no private right of action under the FTC Act, he points out, lawyers may use the guides as evidence that companies are making false and misleading statements under state laws, for instance.
In a Client Alert, lawyers William Tarantino and Alejandro Bras with Morrison & Foerster LLP note that California's green advertising law, through which prosecutions have been brought by local district attorneys and the California Attorney General, incorporates the Green Guides by reference and provides that adherence to the guides is a defense to such lawsuits.
"In sum, any company that markets by reference to the environmental attributes of their products, services, or operations should be familiar with the updated version of FTCs Green Guides, and should review existing and future environmental attribute-oriented marketing statements to ensure that their practices remain compliant," the lawyers wrote.
Although the guides have been revised for the third time, they don't address use of the terms "sustainable", "natural" and "organic". FTC explained it "lacks a sufficient basis to provide meaningful guidance or wants to avoid proposing guidance that duplicates or contradicts rules or guidance of other agencies." For instance, the commission pointed out that the U.S. Department of Agriculture's Natural Organic Program covers organic claims made for textiles and other products that originate from agriculture products.
"No regulatory agency has been willing to take a lead on defining" the word "natural", Prochnow said. "There's no good explanation for it."
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