The use of third-party certifications or seals of approval to substantiate green marketing claims is a growing trend. Marketers, however, should be aware that simply possessing a third-party certification or seal does not obviate their independent obligation to substantiate green marketing claims. Companies remain responsible for ensuring that a third-party certification or seal shown on their product is supported by competent and reliable scientific evidence.
How does this requirement affect marketers that have made green marketing claims based in whole or in part on a third-party certification or seal? If the certification or seal is not legitimate, the marketer is left without the required substantiation of its claims and is vulnerable to an action by the Federal Trade Commission (“FTC”) for engaging in unfair or deceptive acts or practices, in violation of Section 5 of the Federal Trade Commission Act. 15 U.S.C. § 41 et seq.
THE FTC’S CASE AGAINST TESTED GREEN
Recently, the FTC took action against a company, Tested Green, and its owner, Jeremy Ryan Claeys, for selling worthless environmental certifications. In the Matter of Tested Green Certification, FTC File No. 1023064 (Jan. 11, 2011). According to the Commission’s complaint, Tested Green sold environmental certifications to more than 100 customers for a few hundred dollars each without testing the products it was certifying. Further, Tested Green deceived those customers by implying that the company had endorsements from two independent organizations, both of which were owned and operated by Claeys. The FTC’s order bars Tested Green and Claeys from selling the worthless environmental certifications, prohibits them from misrepresenting the sale of any product, and imposes certain compliance reporting requirements for the next 20 years.
THE FTC’S GREEN MARKETING GUIDES
A few months ago, the FTC released proposed revisions to its Guides for the Use of Environmental Marketing Claims (the “Guides” or “Green Guides”). 75 Fed. Reg. 63552-63607 (October 6, 2010). First published in 1992, and amended in 1996 and 1998, the Guides “help marketers avoid making deceptive claims by outlining general principles that apply to all environmental marketing claims.” The Guides further provide “specific guidance about how reasonable consumers are likely to interpret particular claims, how marketers can substantiate them, and how they can qualify those claims to avoid consumer deception.” More than 300 public comments were submitted in response to the proposed revisions and, as of today, the FTC has not released the final version of the revised Guides.
The subject of third-party certifications or seals has taken on major significance in the proposed revisions to the Guides. Their use to substantiate green marketing claims was covered only briefly, in a single example, in the Guides. In the proposed revisions, however, this subject is devoted an entire section. As the proposed revisions state, the use of third-party certifications or seals provides consumers with a way to differentiate competing products based on independent and expert assessments. Although their use by marketers is substantial and growing, it is not without its potential pitfalls.
THE POTENTIAL PITFALLS OF USING THIRD-PARTY CERTIFICATIONS OR SEALS TO SUBSTANTIATE GREEN MARKETING CLAIMS
The first potential pitfall is the reliance on thirdparty certifications or seals as all or part of a marketer's substantiation for its green marketing claims. As spotlighted in the proposed revisions, a marketer must ensure that the third-party certification or seal is based upon “competent and reliable scientific evidence to support its claims.” This means “tests, analyses, research, or studies conducted and evaluated in an objective manner by qualified persons that are generally accepted in the profession to yield accurate and reliable results.” In the proposed revisions, the FTC declined to offer additional guidance on what constitutes a compliant third-party certification program. Rather, according to the FTC, “it is the marketer’s responsibility to ensure that the certification adequately substantiates its claims.” The proposed revisions remind marketers that “simply possessing a third-party certification does not eliminate their obligation to ensure that they have substantiation for their claims, including all claims communicated by the certification.” Although not mentioned in the FTC’s complaint or order, the customers who purchased environmental certifications from Tested Green, and relied on those certifications as the sole basis for their claims, now lack the requisite substantiation and could face enforcement action by the FTC.
In a news release accompanying the complaint and order against Tested Green and its owner, the FTC advised that it “will continue to weed out deceptive seals and certifications like the one in this case.” This case serves as a warning to marketers that illegitimate certification organizations exist and continue to operate and that they must not rely blindly on third-party certification or seals to substantiate their green marketing claims.
The second potential pitfall is the use of unqualified certifications or seals. The proposed Green Guides’ revisions highlight that the “use of a certification or seal by itself may imply a general environmental benefit claim.” Implicit in a general environmental benefit claim is that the product is environmentally superior to other products. Thus, to comply with the Guides, marketers must be able to substantiate this broad claim, a difficult task, as the proposed revisions indicate. Because general environmental benefit claims are difficult to substantiate, the Guides advise marketers not to use unqualified certifications or seals. If marketers cannot substantiate the broad environmental benefit claim, certifications or seals should be accompanied by “clear and prominent language limiting the general environmental benefit claim to the particular attribute or attributes for which they do have substantiation.”
The third potential pitfall is the use of a certification or seal without disclosing a “material connection” with the third-party certifier. In the proposed Guide revisions, the FTC emphasizes that certifications and seals are endorsements; thus, marketers must disclose any material connection with the certifier. For example, to avoid implying a false independent certification, a certification or seal of approval from a trade association must be accompanied by a disclosure that the marketer is a member and pays dues to the trade association. The proposed revisions offer additional examples of material connections between the marketer and the third-party certifier that require disclosure.
If you have questions about the FTC’s recent cease and desist order, the proposed revisions to the Guides, the use of third-party certifications and seals, or the requirements for substantiating green marketing claims, please contact any of the listed attorneys.