On June 9, 2009, the U.S. Federal Trade Commission (“FTC”) testified regarding its efforts to ensure truthfulness of environmental or “green” marketing claims before the U.S. House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce. Through its testimony and latest enforcement actions, the FTC has clearly demonstrated that it will continue to ensure that green advertisements are “truthful, substantiated, and not confusing to consumers.”

In order to protect consumers from unfair or deceptive practices, the FTC explained its multi-tiered approach of (1) issuing rules and guides for businesses, (2) challenging fraudulent and deceptive ads through enforcement actions, and (3) publishing materials to help consumers make informed purchasing decisions.

The FTC’s Guides for the Use of Environmental Marketing Claims (“Green Guides”), 16 C.F.R. Part 260, are the centerpiece of the agency’s environmental marketing program, according to the testimony. The FTC also testified that it actively targets misleading green claims through civil prosecutions. In this regard, the Commission announced new actions against Kmart Corp., Tender Corp., and Dyna-E International, alleging that each company made false and unsubstantiated claims that their products – disposable plates, wipes, and towels, respectively – were biodegradable.

Recent FTC actions based on “biodegradable” and “energy efficient” claims may indicate the beginning of a green marketing enforcement trend. Therefore, advertisers should consult the Green Guides and/or legal specialists in this area to avoid making environmental claims that risk being considered “unfair or deceptive” by the FTC. In addition, advertisers should exercise caution before using terms such as “eco-friendly,” “sustainable,” “carbon neutral” and others that are not included in the Green Guides, and that are currently being studied and followed by the FTC.

The Green Guides, first issued in 1992 and most recently revised in 1998, help advertisers avoid making “unfair or deceptive” claims in violation of the Federal Trade Commission Act (“FTC Act”) by describing the basic elements needed to substantiate specific environmental claims. While the Guides “provide the basis for voluntary compliance” with section 5 of the FTC Act, “[c]onduct inconsistent with the positions articulated . . . may result in corrective action by the Commission under Section 5 if, after investigation, the Commission has reason to believe that the behavior falls within the scope of the conduct declared unlawful by the statute.” § 260.1.

In response to the increase in green marketing, the FTC announced that it is currently reviewing the Guides “to ensure they are responsive to today’s marketplace.” Specifically, the FTC is reviewing public comments, and it plans to conduct its own research on consumer understanding of additional green marketing claims, such as “eco-friendly,” “sustainable,” and “carbon neutral.” Insight on such consumer perceptions is crucial in ultimately determining what constitutes a deceptive claim.