The National Advertising Division (NAD) brought a challenge against Kauai Coffee regarding implicit environmental claims made about its single-serve coffee pods, which were allegedly overstated and not narrowly tailored to convey the accurate benefits that the product offered. Kauai Coffee purportedly made several claims about the compostability of its coffee pods, stating that its products are “certified 100% compostable pods” and that consumers can “enjoy the great taste and convenience of single-serve coffee without worrying about the environmental impact.” NAD also challenged comparative superiority claims, which purportedly implied that Kauai Coffee’s products provided more environmental benefits than its competitors’ K-cup products.

The NAD held that a material limitation of the environmental benefits were not disclosed. Specifically, some of the advertisements did not contain a disclosure indicating that the pods were only compostable in industrial facilities and were not suitable for home composting, while other advertisements included such a disclosure that was in “tiny” and “barely legible” font that was not in close proximity to the claims. The NAD reasoned that such a disclosure was insufficient because it was too far from the main claim; as such, consumers were not likely to notice, read, and understand the disclosure. The NAD also held that the environmental benefits were overstated since many communities do not contain compostable industrial facilities, which must be used in order to enjoy the touted environmental advantages. Finally, the decision stressed that Kauai Coffee did not comply with the FTC’s Guides, which require clear and prominent disclosures about whether a product can be composted at home. As such, it was advised that the advertiser modify and discontinue its claims.

TIP: Companies should ensure that environmental benefit claims are adequately qualified such that the environmental benefits are not overstated. Disclosures related to the qualifications should be clearly and conspicuously disclosed in close proximity to the claim that is being modified.