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Green Marketing Claims
Regulations and Potential LiabilityPresented by
William C. MacLeod, Kelley Drye & Warren LLP
feestock
zero-impact
feedstock content
ECO-SMART
eco-friendly
sustainable
sustainability
renewable
renewable resource
life cycle
recycled
recyclable
biodegradable
degradable
photodegradable
compostable
RENEWABLE
BIO-BASED
NATURAL CONTENT
environmentally friendly
earth-friendly
ozone-friendly
cradle to cradlecradle to
grave CARBON OFFSETS
renewable energy credits
carbon neutral carbon
footprint
CLEAN ENERGY
environmentally preferable
environmentally safe
environmentally safe
naturally derived
non-toxic
energy intensity
energy efficient
Bioenergy
greenhouse gases
environmental management systems (EMS)
alternative fuels
green purchasing
New Buzz Words Reach Washington: Green Purchasing
Jan. 24, 2007: President Bush signs
Executive Order 13423, requiring federal agencies to procure goods and services that include biobased, environmentally preferable, energy efficient, water-efficient and recycled-content products.
Standards for Green Advertising Claims
FTC’s Green Guides – 16 C.F.R. Part 260 www.ftc.gov/energy
They do not have the force of law, but provide a safe harbor for advertisers.
They help advertisers understand how the FTC intends to apply Section 5 of the FTC Act.
What Does the FTC Require for all Ad Claims?
Consumer Perception: What claims does the ad convey to reasonable consumers?
Substantiation: Does the advertiser have “competent and reliable evidence” to substantiate those claims?
General Principles of the FTC’s Green Guides
Principle #1: Qualifications and disclosures necessary to avoid misleading consumers must be clear, prominent, and understandable.
Example: A company advertises its building product as “environmentally friendly” but does not explain how it is friendly for the environment. Using the phrase without specific qualifying language explaining what environmental qualities the building product has is deceptive if it leads consumers to believe that the product has far-reaching environmental benefits that the company cannot substantiate.
General Principles of the FTC’s Green Guides
Principle #2: Claims must be presented in such a way as to make it clear whether they relate to a product, the packaging, and/or the company’s practices.
Example:
A cleaning product is labeled “biodegradable.” Although the chemical cleaner is biodegradable, the spray bottle is not. By itself, the claim may be deceptive if consumers understand the claim to mean that the entire product, including the packaging, is biodegradable. To avoid potential deception, it should be qualified to say, for example, “the chemical cleaning solution is biodegradable.”
General Principles of the FTC’s Green Guides
Principle #3: A claim must not overstate an environmental attribute or benefit, either expressly or by implication.
Example:
A home building company advertises its new energy efficient homes as “guaranteed to provide a 30% decrease in utility bills.” This claim likely overstates the benefit because there are other factors that increase the cost of a utility bill, including utility rates, consumer behavior, and long-term maintenance costs. The company might consider instead saying that its new energy efficient homes “may be up to 30% more energy efficient than a typical 10-year old home (as defined by the U.S. Department of Energy’s Building America Program),” provided the company can substantiate such a claim.
General Principles of the FTC’s Green Guides
Principle #4: Comparative environmental claims must be presented in a way that makes the basis for the comparison clear.
Example: A washing machine is advertised as “30% more efficient.” This claim is ambiguous because it could be a comparison to the advertiser’s immediately preceding washing machine or to a competitor’s washing machine. The marketer should make the basis for the comparison clear, saying, for example, “30% more efficient than typical washing machines were in 2006.”
Types of Advertising Claims in the Green Guides
General environmental benefits Degradable, biodegradable, and photodegradable Compostable Recycled content Recylcable Source reduction Refillable Ozone safe/ozone friendly Non-toxic
Environmental Seals and Certifications
Independent from advertiser
Professional expertise in area
Certification does not insulate advertiser
Avoid broad claims
Climate Change
Renewed attention on the Green Guides
FTC’s Workshops on Green Guides – 2008
FTC Workshops on Specific Topics Under Review: Carbon Offsets and Renewable Energy
Certificates (“RECs”) – January 8, 2008 Green Packaging – April 30, 2008 Green Buildings and Textiles – July 15,
2008
How the Green Guides May Change
FTC’s current review of the Green Guides focuses on new claims that are not covered by the current Guides: Sustainable Renewable Carbon Footprint Carbon Neutral Bio-Based
States Are Monitoring Green Advertising
Many states, like California, Maine, Michigan and Rhode Island, have adopted standards consistent with the FTC guidelines.
» California’s Original Approach: required compliance with state-specific definitions of environmental terms (adopted by states including Indiana)» New York’s Approach: official state emblems or seals designate compliance with state definitions of environmental terms.
Potential Legal Consequences Of Deceptive Advertising
Cease and desist orders Refunds for consumers (redress) Disgorgement of ill-gotten gains Informational remedies – such as corrective
advertising, disclosures in future ads or on product labeling
