Advertising Compliance Service

FTC Proposes Revised "Green Guides"

by John Lichtenberger*

GOVERNMENT RESPONDS TO DRAMATIC INCREASE IN UCE

SEEKS PUBLIC COMMENT ON CHANGES

On October 6, 2010, FTC proposed revisions to the guidance that it gives marketers to help them avoid making misleading environmental claims. The proposed changes are designed to update the Guides and make them easier for companies to understand and use.

CHANGES TO "GREEN GUIDES" INCLUDE NEW GUIDANCE

The changes to the "Green Guides" include new guidance on marketers' use of product certifications and seals of approval, "renewable energy" claims, "renewable materials" claims, and "carbon offset" claims. The FTC is seeking public comments on the proposed changes until December 10, 2010, after which it will decide which changes to make final.

"In recent years, businesses have increasingly used `green' marketing to capture consumers' attention and move Americans toward a more environmentally friendly future. But what companies think green claims mean and what consumers really understand are sometimes two different things." So said FTC Chairman Jon Leibowitz. "The proposed updates to the Green Guides will help businesses better align their product claims with consumer expectations."

GREEN GUIDES WERE FIRST ISSUED IN 1992

The Green Guides were first issued in 1992 to help marketers make sure that the claims they're making are true and substantiated. The Guides were revised in 1996 and 1998. The guidance they provide includes:

general principles that apply to all environmental marketing claims;
how consumers are likely to interpret particular claims and how marketers can substantiate these claims; and
how marketers can qualify their claims to avoid deceiving consumers.

The newly proposed Guides include changes designed to strengthen FTC's guidance on those marketing claims already addressed in the current Guides as well as to provide new guidance on marketing claims not common when the Guides were last reviewed. The proposed changes were developed using information collected from three public workshops, public comments, and a study of how consumers understand certain environmental claims.

PROPOSED REVISIONS TO GUIDES

The revised Guides warn marketers not to make blanket, general claims that a product is "environmentally friendly" or "eco-friendly". Reason: FTC's consumer perception study confirms that such claims are likely to suggest that the product has specific and far-reaching environmental benefits. Very few products, if any, have all the attributes consumers seem to perceive from such claims, making these claims nearly impossible to substantiate.

The proposed Guides also caution marketers not to use unqualified certifications or seals of approval--those that do not specify the basis for the certification. The Guides more prominently state that unqualified product certifications and seals of approval likely constitute general environmental benefit claims. And the Guides advise marketers that the qualifications they apply to certifications or seals should be clear, prominent, and specific.

Next, the proposed revised Guides advise marketers how consumers are likely to understand certain environmental claims, including that a product is degradable, compostable, or "free of" a particular substance. For example, if a marketer claims that a product thrown in the trash is "degradable," it should decompose in a "reasonably short period of time"--no more than one year.

GENERAL ENVIRONMENTAL BENEFIT

As a marketer, under the proposed Guides, you should not make unqualified general environmental benefit claims. Examples of this type of claim include "green" and "eco-friendly". Reason: These claims are difficult, if not impossible, to substantiate. Under the current Guides, you can make unqualified claims if you can back up all express and implied claims. Otherwise, you should qualify the claim.

Under these proposed Guides, qualifications should be clear and prominent, and should limit the claim to a specific benefit. You should make sure that the advertisement's context does not imply deceptive environmental claims. Under the current Guides, this guidance appears only in examples.

CERTIFICATIONS AND SEALS OF APPROVAL

The proposed Guides contains a new section that emphasizes that certifications/seals are endorsements covered by FTC's Endorsement Guides. This new section provides new examples illustrating how those Guides apply to environmental claims. For example, as a marketer, you should disclose material connections to the certifier. Under the current Guides, certifications/seals are addressed in only one example in the general environmental benefit section. (See 16 CFR 260.7, Example 5.)

These proposed Guides say that an unqualified certification/seal (one that does not state the basis for certification) likely conveys a general environmental benefit claim. Accordingly, you should use clear and prominent language limiting the claim to particular attribute(s) for which you have substantiation. This provision highlights guidance that's already provided in the current Guides' Example 5.

The proposed Guides point out that third-party certification does not eliminate a marketer's obligation to have substantiation for all conveyed claims.

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DEGRADABLE

What about solid waste products other than those destined for landfills, incinerators or recycling facilities? The proposed Guides clarify that the "reasonably short period of time" for complete decomposition is no more than one year after customary disposal. Under the current Guides, a marketer should qualify a degradable claim unless it can substantiate that the "entire product or package will completely breakdown and return to nature within a reasonably short period of time after customary disposal."

As a marketer, under the proposed Guides, you should not make unqualified degradable claims for items destined for landfills, incinerators, or recycling facilities. Reason: Decomposition won't occur within one year.

COMPOSTABLE

The proposed Guides make it clear that the time period referenced in the current Guides for an unqualified compostable claim ("All materials in product/package will break down into, or otherwise become a part of, usable compost . . . in a safe and timely manner . . .") means that a product or package will break down in approximately the same time as the materials with which it is composted.

OZONE-SAFE/OZONE-FRIENDLY

The proposed Guides contain minor updates to examples to reflect changes in regulations concerning ozone-depleting chemicals.

RECYCLABLE

The proposed Guides highlights the three-tiered analysis for disclosing the limited availability of recycling programs. This guidance now appears in examples only.

FREE-OF/NON-TOXIC

"Free-of"

A new section expands the current guidance. It advises that even if true, claims that an item is free-of a substance may be deceptive if:

the item has substances that pose the same or similar environmental risk as the substance not present (currently covered in an example); and
the substance has never been associated with the product category (new guidance).

Additionally, pursuant to the proposed Guides, under certain circumstances, free-of claims may be appropriate even where an item contains a de minimis amount of a substance (new guidance). Free-of claims may convey additional environmental claims, including general benefit or comparative superiority claims (new guidance).

"Non-toxic"

The proposed Guides note that such claims likely convey that an item is non-toxic both for humans and for the environment generally. This guidance was in an example in the general environmental benefit section.

MADE WITH RENEWABLE MATERIALS

Under the proposed Guides, as a marketer, you should qualify--

claims with specific information about the renewable material (what it is; how it is sourced; why it is renewable).
renewable materials claims if the item is not made entirely with renewable materials (excluding minor, incidental components).

MADE WITH RENEWABLE ENERGY

As a marketer, you should--

not make unqualified renewable energy claims if the power used to manufacture any part of the product was derived from fossil fuels.
qualify claims by specifying the source of renewable energy (e.g., wind or solar).

CARBON OFFSETS

Under the proposed Guides, as a marketer, you should have competent and reliable scientific evidence to back up your carbon offset claims. This would include using appropriate accounting methods to make sure you're properly quantifying emission reductions and are not selling those reductions more than once.

In addition, you should disclose if the offset purchase funds emission reductions that won't occur for two years or longer. And you should not advertise a carbon offset if the activity that forms the basis of the offset is already required by law.

FTC SEEKS COMMENT

FTC is seeking comment on all aspects of its proposal. Examples include:

How should marketers qualify "made with renewable materials" claims, if at all, to avoid deception?
Should FTC provide guidance concerning how long consumers think it will take a liquid substance to completely degrade?
How do consumers understand "carbon offset" and "carbon neutral" claims? Is there any evidence of consumer confusion concerning the use of these claims?

USE OF TERMS "SUSTAINABLE," "NATURAL" AND "ORGANIC" NOT ADDRESSED

The proposed Guides do not address use of the terms "sustainable," "natural," and "organic." This is either because FTC lacks a sufficient basis to provide meaningful guidance or because FTC wants to avoid proposing guidance that duplicates rules or guidance of other agencies, Organic claims made for textiles and other products derived from agricultural products are now covered by the U.S. Department of Agriculture's National Organic Program.

FTC's VOTE

FTC's vote approving the issuance of the proposed revised Green Guides for public comment was 5-0. FTC is accepting comments on the Guides for 60 days, and continuing until December 10, 2010. Interested parties can submit comments in paper form by following the instructions in the "Request for Comment" section of the Federal Register notice. Comments can be submitted electronically at: https://ftcpublic.commentworks.com/ftc/revisedgreenguides.

LAWYER's REFERENCE SERVICE

16 C.F.R. Part 260: Guides for the Use of Environmental Marketing Claims: Request for Public Comment on Proposed, Revised Guides, FTC File No. P954501, October 6, 2010.

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