The Federal Trade Commission (FTC) is taking a closer look at marketers’ “green claims.” Its recent targets have included the unsupported sales pitches of replacement-window sellers (“Cut your energy bills in half!”), the dubious credentials peddled by an eco-certification outfit that allegedly rubberstamped products and services for a fee, and even the marketing messages of bamboo-clothing makers, who claimed their uncomfortable-sounding garments were antimicrobial, eco-friendly and biodegradable. (Proving that regulators do have a sense of humor, the FTC headline on the latter action was “FTC Charges Companies with ‘Bamboo-zling’ Consumers with False Product Claims.”)
All of these actions came under the mandate of the FTC Act, which empowers the agency to ferret out unfair, deceptive or unsubstantiated environmental claims. Guidance on how to make green claims comply with the Act can be found in the so-called Green Guides.
This business guidance, first issued in 1992 and revised twice within a decade, is undergoing yet another major revision. A high-ranking source within the agency says the final guides most likely will not be issued for several months or more. Nonetheless, the FTC did offer details about its proposed updates in October 2010.
Given that regulators have already stepped up their enforcement actions, companies would do well to begin adhering to the proposed revisions before the final guidance is issued.
Here are four tips that could help your company’s green marketing efforts stay compliant with the FTC’s current thinking on the Green Guides.
When it comes to environmental claims, there is no place for “the fine print.” The proposed revisions strongly emphasize that all marketing messages should be clear and prominent. At a glance, the consumer should be able to tell whether those claims apply to the product, the packaging or just a component of either.
If the product does offer some environmental benefit worth touting, marketers must not overstate the claim. Naturally (no pun intended), it is always dangerous to make any general, environmental benefit claim unless you have competent, reliable evidence to back it up. Catch-all terms such as “green” and “eco-friendly” are all but meaningless in the eyes of the FTC. Indeed, regulators have signaled that unqualified, general environmental benefit claims are difficult, if not impossible, to substantiate and should therefore be avoided.
Marketers should also limit their claims to that which is specific and quantifiable: Rather than describe that package as “eco-friendly,” instead explain that it was produced using “X% post-consumer recycled content.”
One of the most significant changes in the proposed Green Guides is a new section on the use of environmental certifications and seals of approval in advertising. The basic message here is that any sort of certification or seal is equal to an endorsement and, as such, is covered by the previously issued FTC Endorsement Guides.
Those guides spell out the need for substantiation of all claims mentioned in an endorsement or testimonial. Whatever that certification or seal of approval happens to say, it must be truthful, and it must be substantiated.
The FTC’s intent on this score was amply illustrated last year when the agency announced that it had reached a consent agreement with Nonprofit Management LLC and its owner, whom regulators accused of offering a deceptive “Tested Green” environmental certification to any business willing to pay for the honor.
The FTC’s Endorsement Guides, moreover, require disclosure of “material connections” between the certifier or seal-giver and the marketer of the product or service. In the FTC’s eyes, this means any and all relationships that consumers might not reasonably expect. Tested Green, for example, claimed that its certification was “endorsed by the National Green Business Association and the National Association of Government Contractors.” But according to the FTC, those entities were owned by the same individual who owned Tested Green. This relationship should have been disclosed, the agency said.
Likewise, a “seal of approval” does not relieve the marketer of its duty to substantiate all claims conveyed by the certification, whether expressed or implied. Regulators will take a dim view indeed of excuses such as “well, if this isn’t truthful, it is the seal-giver’s fault.”
Every compliance officer’s worst nightmare is to page through a magazine or flip on the TV and run across the company’s latest advertisement—compliance mistakes and all. With the FTC scrutinizing environmental marketing claims as never before, it is particularly important that marketers’ enthusiasm for all things green be balanced against compliance officers’ reservations about the likes of unsubstantiated or unclear claims.
The best way to accomplish this is for the two camps to work hand-in-hand on the project from Step 1. A cardinal principle in FTC advertising law is that substantiation for a claim must be on hand before the claim is made. Companies cannot market a claim, run afoul of regulators and then launch a search party tasked with finding substantiation after the fact.
A talented graphic designer can whip up a nice ad with a few clicks. Backing up that ad with legally sound science is a far-more-daunting proposition. While putting the brakes on marketing can, at times, create tension, it is in everyone’s best interest to put just as sharp a focus on corporate compliance.
Terms such as “free of,” “nontoxic,” “recyclable” and “compostable” might seem straightforward enough, but the proposed revisions to the Green Guides drill into the specific, legally acceptable usage of such language in marketing materials.
Think something is “ozone-safe” or “degradable”? Check the guidance to find out. The proposed revisions, with specific examples, are available at http://www.ftc.gov/os/fedreg/2010/october/101006greenguidesfrn.pdf.
About the Author
FTC veteran Thomas A. Cohn is a partner in the New York City office of national law firm LeClairRyan. He focuses his practice on advising clients on the legal and practical aspects of compliance with FTC and state consumer protection regulations and industry self-regulation programs, as well as representing clients during investigations and enforcement actions. Prior to entering private practice, Cohn served as director of the FTC’s Northeast Region.
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About the Author
Thomas Cohn is a partner in the New York City office of national law firm LeClairRyan. He focuses his practice on advising clients on the legal and practical aspects of compliance with Federal Trade Commission and state consumer protection regulations and industry self-regulation programs, as well as representing clients during investigations and enforcement actions. His clients include a wide variety of online and offline advertisers and marketers, and his practice covers federal and state consumer protection provisions, including consumer financial and consumer privacy laws and regulations. Prior to entering private practice, Mr. Cohn served as Director of the Federal Trade Commission's Northeast Region, supervising its professional and support staff and leading multi-agency law enforcement efforts against various anticompetitive, unfair and/or deceptive practices. He was also responsible for numerous local and regional outreach efforts to educate consumers, business groups, and law enforcement agencies about fraud identification and avoidance, as well as how to comply with consumer protection laws enforced by the FTC, such as the Telemarketing Sales Rule and the CAN SPAM Act. He oversaw numerous law enforcement actions in all areas of advertising and marketing, such as Blue Hippo [computer financing] and Bookspan [Do Not Call]. In addition to serving as Director of the FTC’s Northeast Region, Mr. Cohn began his 17-year FTC career in its Division of Marketing Practices, where he litigated fraud and rule violation cases and coordinated test shoppings of funeral homes for compliance with the Funeral Rule. He played a key role in the development and implementation of the Funeral Rule Offenders' Program, an innovative, self-regulatory alternative to traditional law enforcement. In another role, as Counsel to the Director of the FTC's Bureau of Consumer Protection for four years, he reviewed law enforcement and settlement recommendations, Congressional testimony, and other matters for the Director.