pdf

FTC's Proposed Guides Concerning the Use of Environmental Marketing Claims: What's New, What's Not

Date: Oct 18, 2010

On October 6, 2010, the Federal Trade Commission ("FTC" or "Commission") proposed revisions to its Guides for the Use of Environmental Marketing Claims ("revised Guides") and requested public comments on these revisions.[1]

The FTC originally issued the Green Guides, 16 CFR Part 260 ("Current Guides"), to help marketers avoid making environmental claims that are unfair or deceptive under Section 5 of the Federal Trade Commission Act ("FTCA,") 15 U.S.C. 45.1.[2] The Guides outline general principles that apply to all environmental marketing claims and provide specific guidance about how reasonable consumers are likely to interpret particular claims, how marketers can substantiate them, and how they can qualify those claims to avoid consumer deception.

The revised Guides include modifications intended to clarify existing provisions and requirements, offer guidance on some new claims not previously addressed, and explain why the FTC elected not to address certain other claims. The FTC's proposed revisions were informed by consumer perception data from a study it commissioned, but it solicits additional consumer perception data as part of its call for public comments. The deadline for submission of public comments on the proposed Guides is December 10, 2010.

We provide a brief overview below of key changes, guidance on new terms, and terms that the FTC declined to address.

Key changes to existing provisions:

  • Scope: The revised Guides clarify that they have always applied to business-to-business as well as business-to-consumer settings.
  • General claims: The revised Guides state that unqualified general environmental benefit claims are difficult, if not impossible to substantiate, but that a general claim may be acceptable if qualified by clear and prominent language that limits the claim to a specific benefit.
  • Certifications and seals of approval: These are subject to the FTC's Endorsement and Testimonial Guides, requiring disclosure of any "material connection" between the certifier and the product/service involved. A material connection includes industry trade associations offering certifications.
  • Compostable: A material can be called "compostable" if it breaks down in a "timely manner." The revised Guides defines this to mean breaking down in approximately the same time as other materials that are composted with the claimed product.
  • Degradable: It is deceptive to make a degradability claim for items destined for landfill or incinerators. A "reasonably short period of time" for complete degradation is approximately one year after customary disposal.
  • Recyclable: The FTC maintained the three-tier distinction for recyclable claims depending on whether a "substantial majority," a "significant percentage" or fewer consumers or communities have access to recycling facilities. An unqualified claim of "recyclable" may be made for materials recyclable to a substantial majority of consumers or communities. The Commission included a footnote referencing its informal position that a "substantial majority" means 60%. The Commission maintained its position that "please recycle" and "check to see" disclosures, standing alone, are not adequate to qualify a recycling claim where facilities are not available to a substantial majority of consumers, this type of positive disclosures, including referring to websites or toll-free telephone numbers, may be appropriate qualifiers in combination with other disclosures outlined in the Guides.
  • Recycled content: The Commission continues to advise that marketers use the annual weighted average of recycled content when making a recycled content claim, and maintains that a recycled content claim be qualified if less than 100% of the product or package, excluding minor, incidental components, is made with recyclable content.
  • "Free of": Existing guidance establishes that even if true, a "free of" claim may be deceptive if the new or substituted material poses the same or similar environmental risks, but now specifies that such a claim is deceptive if the substance has never been associated with the product. Such claims may be acceptable if the item contains de minimis amounts of the material referenced, as long the de minimis amounts do not pose any environmental risk. However, the Commission did not address the type of substantiation needed to qualify health benefit or inherently comparative aspects of such claims.
  • Non-toxic: The revised Guides specify that an unqualified claim conveys that the product is non-toxic to both humans and to the environment.
  • Ozone-safe or ozone-friendly: The Commission states that "no CFC" claims may provide valuable information to consumers who might assume that certain products have the negative environmental effects associated with CFCs.

Guidance on New Terms:

  • Made with renewable materials: Renewable material claims should be qualified if less than 100% of the product is made with renewable content, excluding minor, incidental components. Claims should also provide information about the identity of the renewable material, how it is sourced and why it is renewable.
  • Made with renewable energy: Such claims should be qualified if less than virtually all production used renewable sources (which exclude fossil fuels), and the type of renewable energy (e.g., solar, wind) should be disclosed.
  • Carbon offsets: The revised Guides offer limited guidance on these claims, recognizing that consumer perception of carbon offset and similar claims, like "carbon neutral," are evolving. The revised Guides require use of appropriate accounting methods to avoid "double-counting," advise that qualifiers are needed if the carbon reductions will not occur more than two years later, and incorporate the principle of "additionality," meaning that claims may not be made if the reductions are required by law. The FTC urges marketers to provide information necessary to prevent consumers from being misled, and to have competent and reliable evidence supporting the claim.

Terms not addressed:

  • Sustainable: The FTC stated that it lacked a sufficient basis to provide meaningful guidance on the use of "sustainable" as an environmental marketing term, and indicated that respondents did not view "sustainable" in the same way as a general environmental benefit claim. FTC noted that some commenters addressed First Amendment issues in connection with sustainability claims, often related to corporate sustainability initiatives. Under these circumstances, the FTC stated that the topic was not appropriate for general guidance.
  • Organic: Organic claims for agricultural products are regulated by the U.S. Department of Agriculture through the National Organic Program (NOP), so the FTC declined to proposed standards. As to non-agricultural products, the FTC said it lacked information on how consumers understand the term and invited commenters to submit consumer perception data.
  • Natural: Natural claims are also regulated in some contexts. For example, the Food and Drug Administration (FDA) and USDA regulate certain uses of the term, and the FTC defines the term "natural fiber" under the Textile Products Identification Act (TPIA). While declining to adopt specific guidance, the FTC emphasized that marketers using terms such as "natural" must substantiate whatever claims they are conveying to reasonable consumers.

The FTC invited comment on eighteen specific questions, emphasizing its interest in obtaining any consumer perception data. Notably, the FTC declined to adopt provisions and definitions drawn from the International Standards Organization (ISO) standard or other international guidance, saying that while it supported global harmonization goals, its mandate is to address false and deceptive advertising, not to advance environmental policy objectives. There are many nuances in the Guides that will be of keen interest to marketers from a broad spectrum of industries, and the proceeding is expected to generate many comments from affected stakeholders.

 

For more information on the revised Guides, please contact Sheila A. Millar at (202) 434-4143, or millar@khlaw.com



[1] The text released October 6 is available at http://www.ftc.gov/os/fedreg/2010/october/101006greenguidesfrn.pdf.

[2] The Commission issued the Green Guides in 1992 (57 FR 36363 (Aug. 13, 1992)), and subsequently revised them in 1996 (61 FR 53311 (Oct. 11, 1996)) and 1998 (63 FR 24240 (May 1, 1998)).