On October 6, 2010, the FTC unveiled the first proposed update since 1998 to its Guides for the Use of Environmental Marketing Claims (the “Green Guides”). The new Green Guides will have a major impact on environmental or natural benefit claims companies use to advertise or describe their products or services to consumers. The proposed Green Guides include clarification on guidance in the existing Green Guides and new guidance on several issues that were not significant when the previous guides were issued, including:
- Product certifications
- Seals of approval
- Renewable energy claims
- Renewable materials claims
- Carbon offset claims
For claims of carbon offsets, the new FTC guidance requires full disclosure in advertising, marketing or packaging. The new Green Guides define carbon offsets as projects that reduce greenhouse gas emissions in one place in order to counterbalance or “offset” emissions that occur elsewhere. The proposed Green Guides advise marketers to make a disclosure if the emission reductions that are being offset by consumers’ purchases will not occur within two years. The proposed guides also advise marketers to avoid advertising a carbon offset if the activity that produces the offset is already required by law.
The proposed Green Guides emphasize the difference between what companies think green claims mean and what consumers really understand. As with all advertising and packaging, advertisers should carefully consider all potential express and implied claims that a consumer may reasonably take-away from the advertising or packaging—and ensure each claim is properly substantiated.
The FTC Chairman announced that “the proposed guide updates to the Green Guides will help businesses better align their product claims with consumer expectations.” For example, the proposed Green Guides warn that general claims of “environmentally friendly” or “ecofriendly” are likely to suggest to consumers that the product has specific and broad environmental benefits. The FTC advises that such claims should be qualified and narrowed to disclose the particular environmental benefit advertised. Further, the FTC advises that such claims must be substantiated before publication, and the substantiation bar is high—the FTC commented that general environmental benefit claims such as “green” and “eco-friendly” are “difficult, if not impossible, to substantiate.”
While not having the effect of law, the proposed Green Guides will be considered as strong indicators of the policy direction to be taken by the FTC in its enforcement and investigation procedures. Also, when final, the new Green Guides may be used as grounds for consumer class action suits and state attorney general suits under state deceptive trade practice laws.
The FTC is seeking public comments on the proposed changes until December 10, 2010, and will then decide which changes to make final.
The FTC is seeking comment on all aspects of its proposal. Examples include:
- How should marketers qualify “made with renewable materials” claims, if at all, to avoid deception?
- Should the FTC provide guidance concerning how long consumers think it will take a liquid substance to completely degrade?
- How do consumers understand “carbon offset” and “carbon neutral” claims? Is there any evidence of consumer confusion concerning the use of these claims?