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Environmental Marketing Claims and the FTC’s “Revised Green Guides”

  

Monica StoverPublished in Michigan Environmental Law Journal, Spring 2020, Vol. 37, No. 2, Issue 107 [view full issue].
Cite: 37 Mich Env Law J 2 (2020)

by Monica J. Stover, Barnes & Thornburg LLP[1]

In today’s increasingly eco-conscious society, “green claims,” i.e., advertising claims touting a product or service’s environmental benefits, remain on the rise among marketers. Also increasing is consumer demand for “environmentally friendly” products as consumers become more aware and educated about environmental issues that directly affect our planet. Needless to say, marketers’ green claims have a significant impact on consumers as they seek out products and services that they perceive to be less harmful and more preserving of our planet.

With consumers being drawn more than ever to products that help them be more environmentally responsible, green advertising claims are an important marketing tool for many companies across various industries. Putting their trust in the companies that advertise these “eco-friendly” products and services to them, consumers expect not to be misled into believing a product is more eco-friendly than it actually is. The Federal Trade Commission (FTC) has taken steps to help marketers avoid making deceptive advertising claims by providing several useful resources, in particular, its Guides for the Use of Environmental Marketing Claims, known as the “Revised Green Guides.” The basic principles of the FTC’s Revised Green Guides are that an advertisement should be truthful, not misleading or deceptive, and have adequate substantiation to support all reasonably interpreted claims, and the Guides follow the FTC Act’s truth-in-advertising principles.

Though many companies are not going to make a blatantly false claim, it is not difficult to find yourself in the gray area where a reasonable consumer might see an advertisement as deceptive. So, it is important for marketers to be prepared and to use the Revised Green Guides as a user-friendly resource to keep them out of trouble by avoiding misleading consumers with eco-friendly claims.

History of the Green Guides

The Green Guides were first promulgated in 1992, located at 16 CFR Part 260 et seq.,, for the purpose of helping marketers avoid making misleading environmental claims. They were revised in 1996 and updated in 1998. Fourteen years later, in October 2012, following a significant uptick in “green claims” by marketers and a growing number of consumer complaints of “greenwashing,” the FTC again revised the Green Guides as a further effort to reduce deceptive marketing practices in advertising environmental benefits of a product or service. The Revised Green Guides not only provide clarification and further guidance for several commonly used terms such as “recycled” or “recyclable,” but also add several new sections to address issues of growing concern among consumers.

Highlights From the Revised Green Guides: What They Cover and What They Do Not Cover

The 2012 Revised Green Guides cover general principles that apply to all environmental marketing claims, guidance on how consumers are likely to interpret certain claims, how marketers can substantiate those claims, and how marketers can qualify their claims to avoid deception. An especially helpful component of the Revised Green Guides is the examples of acceptable and unacceptable claims within each topic section. The Revised Green Guides include several new topics, including certifications and seals of approval, carbon offset claims, “free-of” claims, “non-toxic” claims, “made with renewable energy” claims, and “made with renewable materials” claims.

The following are some highlights from the Revised Green Guides,[2] some of which carried through from the original principles of the Green Guides, and others are additions focused on either new issues or areas of concern.

  • General environmental benefit claims. The Revised Green Guides prohibit the use of general environmental benefit claims, such as “green” or “eco-friendly,” explaining that the meaning of such claims could be interpreted in various ways by reasonable consumers, and it is highly unlikely a marketer would have the substantiation to support all reasonable interpretations of such claims. The FTC, therefore, cautions against making general environmental benefit claims and encourages marketers to appropriately qualify the claim in some way, such as through a clear and conspicuous disclosure or by simply tying the claim to a specific product attribute. The Revised Green Guides provide several examples for reference. See 16 CFR 260.4.
  • Certifications and seals of approval. These are considered “endorsements” that are covered by the FTC’s Endorsement and Testimonial Guides.[3] 16 CFR 260.6.
  • “Non-toxic” claims. Marketers should have strong scientific and reliable evidence to substantiate the claim, including evidence that the product is non-toxic to humans and the environment. See 16 CFR 260.10.
  • “Recycled” or “recyclable” claims. An unqualified recyclable claim can be made if a substantial majority (defined in the guides as 60%) of consumers or communities have access to recycling facilities. If available to less than the stated 60%, then marketers should qualify the claim, for example, by stating the percentage of consumers or communities that have access. See 16 CFR 260.12 and 260.13.
  • Clarification of “degradable” claims. An unqualified “degradable” claim must be substantiated by evidence that the entire product or package will completely break down within a “reasonably short period of time” after disposal, which the FTC defines as one year. Items that go to a landfill should not be linked to a “degradable” claim because they would likely not meet the one-year rule. See 16 CFR 260.8.

FTC Green GuidesNotably, there are a few commonly used terms that the FTC chose not to interpret in the Revised Green Guides, including, for example, the term “sustainable.” When considering the topic for the 2012 Updates, the FTC declined to address sustainability claims because the FTC did not feel it had sufficient evidence on which to base general marketing guidance. Whether the FTC has gathered such evidence since 2012 is unclear. Even though claims of “sustainability” have proliferated in recent years, it remains uncertain when the FTC will provide guidance on those claims in the context of environmental marketing.

The FTC also declined to provide an interpretation of “natural” and “organic” claims, explaining that the Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA) currently also regulate the use of the terms “natural” and “organic” in advertising and the FTC does not wish to issue conflicting guidance.

In the meantime, for the terms the FTC declined to interpret in the Revised Green Guides, marketers should be aware they remain subject to the general standard of Section 5 of the FTC Act[4] and should understand the importance of qualifying their claims appropriately to avoid deception. Marketers should ensure that they have substantiation for any reasonable interpretation of the claims they have made in the context of the entire advertisement.

Enforcement

The Revised Green Guides are not law. They do not preempt federal, state, or local laws and cannot be used independently to bring an action. Rather, the Revised Green Guides are a non-binding administrative interpretation by the FTC of Section 5 of the Federal Trade Commission Act (FTC Act). Although the Green Guides do not have the effect of law, the FTC can bring an enforcement action under Section 5 of the FTC Act, which generally prohibits unfair and deceptive advertising practices, if a marketer makes an environmental claim that is inconsistent with the Revised Green Guides. Green claims can also come under attack by a competitor through a challenge in the National Advertising Division (NAD) of the Better Business Bureau, which looks to the Revised Green Guides for guidance when confronted with an environmental marketing claim.

Marketers would be wise to consider and follow the guidance provided in the Revised Green Guides to avoid finding themselves at the wrong end of an FTC action or NAD challenge.

Useful Pointers & Best Practices from a Current Practitioner

  • Context is key. Consider the entire Identify all express and implied claims in the advertisement, and ensure marketers have adequate substantiation for not only express statements in the ad, but also any reasonable interpretations based on implied claims in the ad. A good example of the importance of considering the entire ad and its context is found in the Revised Green Guides. The example advertisement says “Buy our printer. Make a change.” The text is in green font and alongside a picture of the printer sitting in a bird’s nest on a tree branch, surrounded by a dense forest. The FTC instructs that this is an unqualified general environmental benefit claim that a marketer should not make without appropriate disclosures to avoid deceiving consumers.
  • Understand and be mindful of the increased level of substantiation, namely competent and reliable scientific evidence, required for “general environmental benefit” claims and certain other claims such as carbon offsets. If a marketer wants to make a general claim that their product or service is “eco-friendly” or “Green” or “planet-friendly”, they should first—before publishing the claim—make sure they have substantiation meeting the higher standard of competent and reliable scientific evidence for all reasonable interpretations of the claim. Barring such substantiation, which the FTC cautions is very difficult to achieve, marketers should qualify the claims appropriately to avoid misleading consumers.
  • Keep a record. It is a good idea to create a good faith contemporaneous record of what terms mean to the party using them when those terms are not defined in the Revised Green Guides. Such a record should consider the general advertising guidelines of being truthful, not misleading or deceptive, and having adequate substantiation to support all reasonable interpretations of the claims from the relevant consumer’s perspective.
  • Ensure substantiation is in place before making the claim. A company’s best practice is to have preexisting evidence to substantiate its claims, especially if the company intends to make an unqualified claim.
  • The Revised Green Guides are applicable to not only “consumer” products or purchases, but also in the business-to-business context. Indeed, whoever the audience, whether it’s a consumer or another business, they are relying on the message conveyed when making their purchasing decision. The Revised Green Guides apply to that message, and so an advertiser should ensure it has adequate substantiation.
  • Independent third-party testing and certification[5] by a recognized testing entity are going to be stronger and more credible than a company’s own “in-house” testing or certification. While in-house testing can be used, it must be rigorously conducted according to an established industry standard that directly relates to such a claim.
  • Be specific. Stating the specific environmental benefit of a product can help avoid making general environmental benefit claims that are going to be subject to the highest scrutiny. An example is “made with 45% recycled content.”

Remember, the FTC’s Green Guides are a marketer’s friend, covering an array of important topics and providing significant guidance with a host of examples for reference while navigating the development and substantiation of an environmentally friendly claim for products or services. Refer to them early and often in the process of claim development and substantiation.


[1] This article should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.

[2] The below topics, as well as several additional topics, are more thoroughly addressed in the Revised Green Guides, the full text of which can be seen here

[3] These guidelines can be found here.

[4] 15 USC 43.

[5] For example, if the claim is that a product is “biodegradable”, the advertiser, among other things, needs to have substantiation based on testing that demonstrates the product really is biodegradable.


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