the ftc's revised green guides for environmental marketing

PRESENTATION TITLE

ADVERTISING LAW

The FTC's Revised Green Guides for Environmental Marketing: Drastic Changes or Rational Revisions?

April 7, 2011

Barry M. Benjamin, Esq.bbenjamin@kilpatricktownsend.com

(212) 775-8783

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What is ENVIRONMENTAL or GREEN Marketing?- merely advertising an environmentally friendly benefit

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General Advertising PrinciplesThe two most important words:•

CLAIM: Statement of Fact that may be proven/disproven = a claim

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SUBSTANTIATION: Proof of Truthfulness of the claim– Written record – copy of factual study– Must be on hand PRIOR TO PUBLICATION

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GENERAL ADVERTISING PRINCIPLES

• DECEPTION = an ad is deceptive if it:• Contains a statement or omission, that is• Likely to mislead a reasonable consumer• In a material way (factors in purchasing

decision)• ***CONSUMER IMPRESSION/TAKE AWAY***

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GENERAL ADVERTISING PRINCIPLES

Puffery – not specific claim, perfectly ok - vague; mere opinion; exaggeration; bluster

- “We are the BEST in the world!”

“A seller’s privilege to lie his head off, so long as he says nothing specific.”

- Prosser & Keaton on the Law of Torts

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• Dec. 14, 2010: NAD recommends FP International discontinue certain biodegradable claims; finds advertiser can support qualified “green” claims

• Challenge brought by competitor Starchtech• FP International, Case #5256 (12/03/10)

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• Jan. 18, 2011: NAD Recommends Applied Textiles, Nano-Tex Drop "EPA-Approved" and Other Claims

• Case brought by competitor Crypton, Inc.• Applied Textiles, Inc. & Nano-Tex, Inc., Case #5279 (01/18/11)

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• Jan. 1, 2011: FTC Settlement Ends "Tested Green" Certifications That Were Neither Tested Nor Green

• Company Allegedly Charged Up To $549.95 for Worthless Environmental Labels

• Neither tested, nor certified, nor green• “Tested Green” Run by a former journalist and failed candidate for

Kansas Secretary of State – who ran “program” while running for office

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Introduction

• Environmental Marketing - all the rage in the late 1980’s and early 1990’s

• Early advertising cases: plastic grocery bags are “biodegradable,” a truthful statement– But they weren’t – most went to a landfill,

not exposed to sunlight• Recyclable, biodegradable, earth friendly

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FTC Regulation: Green Guides

• Federal Trade Commission – investigates and issues “Green Guides”

• “Guides for the Use of Environmental Marketing Claims”

• Last updated in 1998

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FTC Regulation: Green Guides

• FTC vigorously enforced Green Guides and environmental claims generally– Claims such as

• “safe for the environment”• “ecologically safe”• “practically non-toxic”

– All subject to enforcement by FTC because claims were overstated or simply not true

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FTC Regulation: Green Guides

• FTC’s proposed revisions to Green Guides issued in October, 2010

• Revisions needed – the original Green Guides didn’t even address climate change claims, green building claims, textile/fabric claims

• FTC workshops – invited industry to discuss potential guidance and ramifications

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FTC Regulation: Green Guides

• Before the revisions were issued, private actors fill void

• TerraChoice issues “Six Sins of Greenwashing” in 2007 – not necessarily false advertising, but not truthful statements

• Up to Seven Sins • “Greenwashing” is “misleading consumers re

the environmental practices of a company or the environmental benefits of a product or service”

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Seven Sins of Greenwashing

1. Sin of the Hidden Trade-off. E.g. selling organic vegetables grown in California in Delaware

2. Sin of No Proof. Claims that cannot be verified.

3. Sin of Vagueness. Claim is so poorly defined, likely to be misunderstood by consumer. E.g. “All Natural” when product contains mercury and formaldehyde (natural occurring, but poison)

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Seven Sins of Greenwashing (Continued)

4. Sin of Irrelevance. Truthful yet completely unimportant claims (e.g. “CFC-Free” when CFC’s banned for 30 years)

5. Sin of Lesser of Two Evils. Claim may be true, but please! E.g. organic cigarettes, Fuel efficient SUV

6. Sin of Fibbing. E.g. placing what appears to be a third party certification on product

7. Sin of Worshipping False Labels. “Certified eco-friendly” by internal corporate body

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The Revised Green Guides1. Updated claims addressed in original

guides2. Addressed new claims not originally

addressed3. Provided guidance generally

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• Revisions to Green Guides scrupulously evidence based

• FTC specifically asked for studies, scientific analyses, consumer surveys, other evidence

• Where no evidence, FTC generally did not issue guidance or pronouncements

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Example: “Lifecycle” Claims• Lifecycle claims – the entirety of a product, from manufacture, production,

packaging, shipping, purchasing, disposal of packaging, consumer use, disposal of product

• Very complex analysis – numerous factors impact on all of these elements• Do consumers think “eco-friendly” refers merely to product use, or to entire

lifecycle of product? • FTC declined to provide guidance – indicated in a footnote that the Guides do

not address lifecycle claims because it “lacks sufficient information on which to base guidance.”

• No evidence of consumer impression of what claim means• General guidance not likely useful in any particular instance.• FTC will review claims on a case by case basis

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General Environmental Benefit claims• “eco-friendly”; “green”• FTC reminds advertisers of obligation to SUBSTANTIATE every

express and implied claim made in advertising/product packaging perceived by reasonable consumers about an objective quality, feature, or attribute of a product.

• FTC found that consumers interpret unqualified “eco-friendly” claims as meaning the products have far-reaching environmental benefits and specific attributes such as being biodegradable, non-toxic or made with renewable energy.

• Few, if any, products have all of the attributes that consumers interpreting “eco-friendly” claims believe them to have

• FTC considers general eco-friendly claims as nearly impossible to substantiate.

• Revised Green Guides advise marketers NOT TO MAKE UNQUALIFIED GENERAL ENVIRONMENTAL BENEFIT CLAIMS

• Is this reasonable? What is the consumer impression?

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Specific Green claims updated by revised Green Guides:– Degradable– Compostable– Recyclable– Recycled content– Ozone friendly/Ozone safe– Free of / Non-Toxic

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Specific Green claims new to revised Green Guides:– Sustainable– Organic/Natural– Renewable materials– Renewable energy– Carbon Offsets

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• For each claim, in a few pages, the FTC addresses each claim:– What Current Guides say (for claims addressed in original

Guides)– Comments from public– Consumer perception evidence– Analysis and Guidance

If your client proposes to use a specific word or “green” claim, go to the proposed revisions and read them – they are VERY helpful, short, and to the point.

http://www.ftc.gov/os/fedreg/2010/october/101006greengui desfrn.pdf

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GUIDANCE

GUIDANCEA. Evaluate Env. Benefits. ID and accurately

describe env. benefits of product, packaging, and manufacturing processes

B. Seek Cert from 3P. Be careful with substantiation; ensure independence; back stop claims and proof

C. Substantiate and Document Claims. Keep technical data. Consider entire lifecycle.

D. Precision. Make precise claims (e.g. what exactly does “carbon neutral” mean?)

E. Consistency across all media.

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Q & A

Barry M. Benjamin31 West 52nd Street, New York, NY 10019

(212) 775-8783bbenjamin@kilpatricktownsend.com