On October 6, 2010, the Federal Trade Commission (“FTC”) proposed guidance to help marketers to avoid making misleading environmental claims. The proposal would amend the FTC’s “Green Guides.” Comments will be accepted until December 10, 2010.
Section 5 of the Federal Trade Commission Act prohibits unfair or deceptive acts or practices. Whether an advertisement is deceptive under the FTC Act depends on (1) what claims, express or implied, the add conveys to a reasonable consumer; and (2) whether those claims can be supported with competent and reliable evidence.
To provide further assistance to environmental marketers, the FTC issued “Green Guides” regarding the kinds of environmental advertisements that the FTC finds deceptive. See 16 C.F.R. Part 260. The Green Guides were first promulgated in 1992 and were amended in 1996 and 1998. The Green Guides, which apply to all environmental marketing claims (including labeling, advertising, promotional material, logos and product names), consist of general principles, specific guidance, and examples on the use of environmental claims. The Green Guides are not enforceable regulations; however, if a marketer makes claims that are inconsistent with the Green Guides, the FTC can take action under Section 5 of the FTC Act.
The FTC proposal is in response to what has been noted as the “virtual tsunami” of environmental marketing over the last few years. The proposal followed a series of public workshops and the FTC’s solicitation of public comments on three new green marketing issues: carbon offsets and renewable energy, green packaging claims, and claims for green building and textiles. The proposal announced October 6 includes both revisions to and additions to the current Green Guides. The proposed guides have also been reorganized and simplified.
The FTC proposed multiple revisions regarding claims currently addressed by the Green Guides. For instance, the proposed revisions make clear that marketers should not make unqualified general environmental benefit claims, such as that a product is “green” or “eco-friendly”. The proposed revisions to the Green Guides also make clear that certifications and seals of approval are endorsements covered by the FTC’s endorsement guides, and that third-party certification does not eliminate the marketer’s need to substantiate all expressed and implied claims. Finally, the proposed revisions clarify under what circumstances marketers can make certain types of claims, such as that a product is degradable, compostable, ozone-safe/ ozone-friendly, recyclable, or non-toxic.
The FTC also proposed additions to the Green Guides in three areas. These areas include:
- Renewable material content claims
- Renewable energy claims and references to renewable energy certificates (RECs); and
- Carbon offset claims.
The FTC explained that marketers making carbon offset claims, for instance, must meet certain verification, quantification and additionality standards, and disclose if the emissions reductions do not occur within two years. The FTC decided against addressing terms such as “sustainable”, “natural”, and “organic”, which are addressed by other federal agencies.