The Federal Trade Commission recently unveiled long-awaited proposed revisions to its Guides for the Use of Environmental Marketing Claims, known as the “Green Guides,” which were last updated in 1998 (available at http://www.ftc.gov/os/fedreg/2010/october/101006green guidesfrn.pdf). The Green Guides help marketers comply with basic advertising law principles when making “green” advertising claims by ensuring claims are true and substantiated. As part of its revision effort, the FTC relied on public workshops, comments and a study of consumers’ perceptions of environmental claims. Moreover, the FTC has requested public comments on the proposed revisions, through December 10, 2010, after which time the FTC will decide what changes to make final.
Beware of Unqualified Certifications or Seals of Approval
The current Green Guides do not contain a section devoted to certifications or seals of approval. In fact, the current Green Guides address certifications and seals of approval only once, by way of an example (Example 5) of a product label containing a seal of approval in the shape of a globe, with the words “earth smart” around it. This type of insignia would convey a broad environmental claim to consumers, and the advertiser is unlikely to have proper substantiation for all of the environmental benefits the consumer perceives from the claim. If the advertiser cannot substantiate the broad claim, then, the Green Guides say, this type of seal of approval would be deceptive.
In recent years, there has been a sharp increase in the use of third-party certifications and seals of approval as a significant green marketing trend. This trend has been identified by the FTC as posing potential problems for consumers because consumers rely on these certifications when evaluating environmental claims and typically cannot verify them. In response to these concerns, the FTC has proposed adding a section to the Green Guides specifically addressing these certifications and seals of approval.
The proposed, revised Green Guides section on certifications and seals of approval is divided into three sections: (1) certifications and seals as endorsements, (2) certifications and seals as general environmental benefit claims, and (3) third-party certifications as substantiation.
1. Certifications and Seals as Endorsements
This proposed sub-section reminds marketers that third-party certifications or seals of approval constitute endorsements, which must meet the criteria set forth in the FTC’s Endorsement Guides. The proposed sub-section then provides a few examples that illustrate how those Endorsement Guides apply to environmental claims. The first example is of a seal of approval created by the marketer itself, rather than bestowed by a third-party. The FTC’s view is that a seal of approval on a product is perceived by consumers to be from an unaffiliated third party. The proposed example notes that in order to avoid this deception of the consumer, the marketer should use clear and prominent qualifying language to alert consumers that the marketer created the certifying program, not a third party.
The second example is of a marketer who displays a seal of approval bestowed by a trade association in which the marketer is a member. The example notes that because the certifier is not truly independent of the marketer, the marketer should disclose its connection with the endorsing association in order to avoid deception because consumers would view the connection as material to their understanding and impression of the claim.
The final example is of a marketer that is a member of the certifying association, which is an industry trade association, whose name in itself is misleading. The theory is that the name of the trade association itself may lead consumers to believe that the association is an independent certifying organization. The example notes that in this scenario the marketer should disclose that the endorsing association is an industry trade association in order to avoid deception.
2. Certifications and Seals as General Environmental Benefit Claims
The second proposed sub-section highlights guidance already provided in Example 5 in the current Green Guides. An unqualified certification or seal conveys a broad, general environmental benefit claim, and marketers must either have substantiation for that claim (which is unlikely) or use clear and prominent language limiting the claim to particular attribute(s) for which they do have substantiation. The only formal change in the proposed, revised Green Guides is to move this guidance from a mere example into a new certification sub-section.
3. Third-Party Certifications as Substantiation
The final sub-section describes the FTC’s proposed guidance on the use of certifications to substantiate environmental claims. The FTC stresses that third-party certification does not eliminate a marketer’s obligation to have substantiation for all conveyed claims. A marketer may rely on a third-party certification as all or part of its substantiation only if the marketer ensures that the certification constitutes competent and reliable scientific evidence to support its claims with tests, analyses, research or studies. In essence, the substantiation obligation is not reduced or lessened in any way by the third-party certification.
Under the proposed, revised Green Guides, marketers should give considerable thought to using certifications or seals of approval, and do so only when they have appropriate substantiation for the advertising messages conveyed by the certifications or seals.