FTC Updates Green Guides To Reduce Deceptive Environmental Marketing Claims

Green Space Today
Ghazal Sharifi

Products claiming to be eco-friendly or environmentally-friendly have been popping up throughout the consumer market. Advertisers have attached these “green” claims to items ranging from packaging material to entire buildings. After nearly twelve years without updated regulations, on October 6, 2010, the Federal Trade Commission (“FTC”) proposed modifications to its Guides for the Use of Environmental Marketing Claims (16 C.F.R. § 260 et seq.), otherwise known as the “Green Guides.” The Green Guides are not legislative rules but rather are voluntary, administrative guidelines and therefore do not preempt regulation by other federal, state or local government entities.

The Green Guides were last updated in 1998. The proposed changes include new guides on product certifications, seals of approval, claims of renewable energy, renewable materials and carbon off-sets. Specifically, the Guides indicate that when marketers make general unspecified environmental claims of “green” or “eco-friendly” they are indicating that their particular product has far-reaching environmental benefits, which is inherently deceptive. Therefore, the Guides require that marketers substantiate those claims with specific benefits and clear and prominent qualifications.

The updated version of the Guides mostly reinforces, clarifies, and expands upon the 1998 version. The changes are not final. The FTC is seeking public comment on the proposed changes until December 10, 2010, after which it will make an assessment of whether to make the proposed changes final. The purpose of the guides is to direct marketers in making more accurate eco-friendly or environmentally friendly claims in marketing their products. These guidelines are intended to reduce consumer deception.

Updating Existing Guides
The Guides also identify more stringent requirements for marketers relating to certifications and seals of approval, which lead to general, and often unsubstantiated, environmental claims. The Guides indicate that marketers should not rely on unqualified certifications where the certificates or seals of approval do not identify the basis for the certification or seal.

The Guides touch on degradable and compostable materials. The update clarifies that marketers should not make claims of degradable materials if those materials are destined for disposal on land and will not decompose within one year. Similarly, the Guides clarify that for a marketer to make a proper claim for a compostable product, the product or package should break down within relatively the same time as the materials that the product or package is composted with.

The Guides now expand upon the 1998 version by establishing a three-tiered analysis for whether a marketer should identify a product as recyclable. For example, if recycling is available to a substantial majority of the consumers in area communities, then a marketer can make an unqualified “recyclable” claim. However, if fewer consumers or communities have access to recycling facilities, then marketers must qualify their “recyclable” claims by identifying that the product is recyclable in only a few communities that offer recycling.

New Guides
The Guides have several new provisions not included in the 1998 version. If marketers claim that their products are made with renewable materials, they must explain with details about the claimed “renewable” material. Furthermore, marketers should detail if the claimed “renewable” materials are not themselves completely composed of renewable materials.

Claims of products made with renewable energy must be qualified. Marketers should not make claims that their products have been made with renewable energy if any part of the product was derived from fossil fuels. In addition, marketers should identify the source of the renewable energy and how much of the manufacturing process occurred with the use of renewable versus conventional energy.

Finally, the Guides discuss carbon-offset claims by marketers. Carbon offsets are credits or certificates that represent reductions in greenhouse gas emissions. Marketers quantify their greenhouse gas reductions and sell the carbon offsets to purchasers. The new Guides encourage marketers to present reliable scientific evidence to support any carbon offset claims. This requires marketers to properly quantify emission reductions to ensure that they are not selling those reductions more than once. Furthermore, marketers should not make a carbon-offset claim if the methods that they use are already required by law.

Impact of the New Guides
For years, the FTC has not been very active in cracking down against deceptive environmental marketing. However, the proposed additions and modifications to the Guides show a strong push in that direction. In conjunction with the Green Guides, the FTC is increasing its enforcement powers on deceptive “green” marketing and practices. As the Green Guides themselves are not enforceable, the FTC can still act through Section 5 of the FTC Act (15 U.S.C. § 45) to prevent businesses that are misrepresenting their “green” practices to their clients.

Through Section 5, the FTC can file a Complaint against entities or persons using any unfair method of competition or unfair or deceptive act or practice that affects commerce. The entities or persons will then be afforded a hearing where the Commission will make a determination of whether the entities or persons are engaging in an unfair method of competition or unfair or deceptive act or practice. If found that the entities or persons are in violation of the law, the Commission will issue a cease and desist order to the violating entities or persons.

After years of not utilizing its Section 5 powers against deceptive “green” claims, the FTC has recently resumed enforcement. The FTC’s push toward enforcement is yet another impetus for businesses to heed the Green Guides and to ensure that they too are in compliance with the Green Guides.