Reigning in Misleading Green Marketing Claims – Part II

United States of America

In 1992, the U.S. Federal Trade Commission (FTC) issued the Guides for the Use of Environmental Marketing Claims, also referred to as the “Green Guides” or “Guides,” to help marketers ensure that the claims they make are true and substantiated. The Green Guides were revised in 1996 and again in 1998 and included the following:

• General principles that apply to all environmental marketing claims;

• Guidance on how consumers are likely to interpret particular claims and how marketers can substantiate those claims;

• Tips on how marketers can qualify their claims to avoid deceiving consumers.

On October 6, 2010, the FTC released a revised version of the Green Guides for a 45-day public comment period ending December 10, 2010. The proposed changes to the Guides are designed to strengthen them and make them easier to use and understand. They provide guidance on the following:

• Qualifications and disclosures: To prevent deceptive claims, qualifications and disclosures should be clear, prominent, and understandable.

• Distinction between benefits of product, package, and service: Unless it is clear from the context, an environmental marketing claim should specify whether it refers to the product, the product’s packaging, a service, or to only a portion of the product, package, or service.

• Overstatement of environmental attribute: An environmental marketing claim should not overstate, directly or by implication, an environmental attribute or benefit. Marketers should not state or imply environmental benefits if the benefits are negligible.

• Comparative claims: Comparative environmental marketing claims should be clear to avoid consumer confusion about the comparison. Marketers should have substantiation for the comparison (FTC 2010b).

The Green Guides also caution companies against making blanket, general claims that their products are “environmentally friendly” or “eco-friendly.” The FTC argues that few products, if any, have all of the attributes that consumers believe them to have, which makes it nearly impossible to substantiate the claims (FTC 2010b).

However, “marketers can qualify general environmental benefit claims to prevent deception about the nature of the environmental benefit being asserted. To avoid deception, marketers should use clear and prominent qualifying language that limits the claim to a specific benefit.”

The proposed revisions to the Guides include guidance on claims emphasizing “renewable energy” and “renewable materials,” as well as buzzwords like “carbon offset,” “compostable,” “degradable,” and “free of” a particular substance (FTC 1999, 2010a,b).

With respect to eco-labels and product certification programs, the Green Guides state the following:

A. “It is deceptive to misrepresent, directly or by implication, that a product, package, or service has been endorsed or certified by an independent third-party” when, in fact, it has not.

B. “A marketer’s use of the name, logo, or seal of approval of a third-party certifier is an endorsement, which should meet the criteria for endorsements provided in the FTC’s Endorsement Guides “Third-party certification does not eliminate a marketer’s obligation to ensure that it has substantiation for all claims reasonably communicated by the certification.”

C. “To avoid deception, language qualifying a certification or seal of approval should be clear and prominent and should clearly convey that the certification or seal of approval refers only to specific and limited benefits. This qualifying language may be part of the certification or seal itself” (FTC 2010b).

The Green Guides also discourage companies and marketers from using unqualified certifications or seals of approval that do not specify the basis of the certification. Thus, any qualifications that apply to certifications or seals should be clear, prominent, and specific (FTC 2010a).

It is important to note, however, that the FTC qualifies the Guides as “administrative interpretation of the law,” adding that “they do not have the force and effect of law and they are not independently enforceable.

However, if a marketer makes claims that are inconsistent with the Guides, the FTC can take action under Section 5 of the FTC Act, which prohibits unfair or deceptive practices” (FTC 2010a).

Moreover, the proposed revisions to the Guides do not address use of the terms “sustainable,” “natural,” and “organic,” because either the FTC lacks a sufficient basis to provide meaningful guidance or the agency wants to avoid proposing guidance that duplicates rules or guidance of other agencies (FTC 2010a,b).