On October 1, 2012, the Federal Trade Commission (“FTC”) issued its “Guides for the Use of Environmental Marketing Claims,” (“Guide”) which directs advertisers and marketers on the proper use of “green” or environmental claims in the sale or promotion of their products, services, or brand. The full Guide is published at 16 C.F.R. § 260.1 et seq. Marketers need to be aware of these new guidelines before they make green or environmental claims (such as “100% RECYCLABLE MATERIAL,” “GREEN,” or “ECO-FRIENDLY”).
The Guide helps marketers understand whether their promotions and product labels are unfair or deceptive under Section 5 of the FTC Act, 15 U.S.C. § 45. The FTC may bring a claim under Section 5 of the FTC Act against any marketer that publishes an environmental claim that is unfair, deceptive, or otherwise in violation of the Guide. 16 C.F.R. § 260.1(a) (2012). The FTC defines a claim as “deceptive” if the claim is “[a] representation, omission, or practice . . . [that] is likely to mislead consumers acting reasonably under the circumstances and is material to consumers’ decisions.” Id. § 260.2.
The FTC’s prohibition on unfair or deceptive claims apply to any green or environmental claims (statements) made about a product, service, or brand by any person or company in the sale or promotion of their product, service, or brand, regardless of the medium. The FTC Act and the Guide apply to both business-to-consumer and business-to-business transactions. Id. § 260.1(c). Further, the marketing regulations under the FTC Act and the Guide are in addition to other local, state, and federal environmental laws.
The basic principal under the FTC Act and the Guide is that marketers cannot make any green or environmental claims that are incorrect, lies, or that otherwise hide facts, whether directly (e.g., by statements) or indirectly (e.g., by colors and surrounding graphics), on an advertisement or product packaging. The Guide provides further examples as summarized below.
General Environmental Benefit Claims
Perhaps the most dangerous marketing claims are those that are broad and unsupported by facts, such as “WE ARE A GREEN COMPANY” or “SHOP OUR ECO-FRIENDLY PRODUCTS.” The FTC prohibits these general environmental benefit claims. Id. § 260.4(a)-(b). Company and product or service brand names that have general environmental benefit claims within them (“ECO-FRIENDLY CO.” or “GREEN LAWN MOWER”) are also prohibited under the FTC Act as they are usually unsubstantiated and misleading. Id. § 260.4(d). The FTC recommends that these broad, general environmental benefit claims be qualified with specific environmental benefits that are correct and not misleading. Id. § 260.4(c).
Overstatement of Environmental Attributes
Even indirect claims can violate the FTC Act and the Guide. Consider, for example, two examples provided by the FTC. First, the claim “50% MORE RECYCLED CONTENT THAN BEFORE” is deceptive if the total recyclable content is only three percent (and was increased from two percent), despite being true. Second, a non-reusable product, such as a trash bag or diaper, should not be labeled as “RECYCLABLE” when a consumer would not typically reuse the product even if it is in theory recyclable. Id. § 260.3(c).
Certifications and Seals of Approval
Marketers can make statements that their product or service is endorsed or certified by an independent third party provided that the certifications and seals of approval comply with the FTC’s Endorsement Guides, 16 C.F.R. Pt. 255. Id. § 260.6(b). However, a bona fide certification does not give the marketer a rubber stamp to avoid having to otherwise substantiate its claims and avoid deceptive environmental claims under the FTC Act or the Guide. Id. § 260.6(c).
Compostable, Degradable, Non-Toxic, Carbon-Offset, and Ozone-Safe Claims
Claims that a product or packaging is compostable (e.g., breaks down into usable compost), degradable or biodegradable, or non-toxic, and carbon offset claims, must be based on scientific and accounting evidence to avoid being deceptive. Id. §§ 260.5(a), 260.7-260.8, 260.10. Further, claims that a product is ozone-safe or ozone-friendly is generally deceptive if the product contains any ozone-depleting substance. Id. § 260.11.
Marketers cannot make “FREE OF [SUBSTANCE]” claims on product or packaging labels if the product or package
contains more than trace amounts of the substance;
is in fact free of the substance but has similarly dangerous substances; or
is in fact free of the substance but the substance is one that is not typically associated with the product category such as to be deceptive.
Id. § 260.9(b)-(c).
Recyclable and Recycled-Content Claims
Unqualified claims that a product or packaging is recyclable are deceptive unless the recyclable content can practically be separated from the non-recyclable content through an established recycling program. Id. § 260.12(a). Claims that a product or packaging is made from recycled material should generally be qualified with the percentage of recycled material to avoid being deceptive (e.g., “MADE FROM 40% RECYCLED MATERIAL”). Id. § 260.13(d). The FTC defines “recycled material” as material recovered from waste or other used or post-consumer material. Id. § 260.13(a).
Marketers generally cannot make unqualified claims that a product is made with renewable energies unless they purchase renewable energy certificates. Id. § 260.15(a). Likewise, unqualified claims that a product or packaging is made from renewable materials can often be misleading to consumers if it suggests that the product or packaging is also recyclable, and is deceptive if more than incidental material in the product or packaging is not made from renewable materials. Id. § 260.16(b)-(c).