April 30, 2014
Environmental, Green, Intellectual Property Alerts

How Green Are Your Products? The FTC Scrutinizes Marketing Claims

A company that sells plastic lumber products is in a challenging position with respect to marketing and claims of environmental friendliness.  Renew Plastics of Wisconsin makes plastic lumber products that are used to make items such as outdoor decking and furniture.  In promoting its products it claimed that one line of them was made from 90 percent or more recycled content, another line of products was made from mostly post-consumer recycled content, and that both products were recyclable.

In April it entered into a Consent Order with the Federal Trade Commission that prohibits it from making any statements about the recycled content, post-consumer recycled content, or environmental benefits of any product or package unless they are true, not misleading, and are substantiated by competent and reliable evidence, which for some claims must be scientific evidence.  The significance of this action is that Renew Plastics' marketing claims did not have to be false to be misleading.  Whether the marketing claims were misleading or not depends on how FTC interprets the claim.  In FTC's view, an unqualified claim that a product is recyclable cannot be made unless the item can be recycled at established recycling programs that are available to at least 60% of consumers or communities where it is sold.  If only part of the product is recyclable or if fewer than 60% of communities have recycling programs that accept the material, claims of recyclability must be qualified.

Green Guides Overview

The FTC's action was based on its "Green Guides" first issued in 1992, and last revised in 2012.  Renew Plastics' case is just one of a series of recent cases that indicate stepped up enforcement of the Guides.

The Guides explain what the FTC considers to be misleading marketing claims regarding environmentally-friendly or "green" products.  The Guides are not separately-enforceable regulatory authority but, instead, provide guidance as to what the FTC considers to be deceptive or misleading acts or practices affecting commerce and therefore prohibited by Section 5 of the FTC Act.

As environmental concerns have become more important to consumers, claims touting the environmental benefits of consumer products become more prevalent.  Store shelves now contain plenty of examples of products trying to distinguish themselves from their competition on the basis of being better for the environment.  The 2012 revisions clarify when such "eco-friendly" claims go too far and are considered to be misleading.

While the FTC's intentions are laudable, it is important to understand the details of their Green Guides, as their interpretation of certain terms may not be consistent with other plausible or common interpretations of those terms.  The marketing claim does not have to be "false" to be "misleading" and therefore prohibited in the FTC's eyes.

Recent Enforcement Actions

For example, the Green Guides state that an unqualified claim that a product is green because it is made with recycled content might be deceptive if the environmental costs of using the recycled content outweigh the environmental benefits.  Likewise, an unqualified claim that a product is biodegradable might be deceptive if the item will not completely degrade within a reasonably short period of time as customarily disposed of – and in the FTC's view, an item sent to a landfill will not break down within a year and so a claim that it is biodegradable would need qualification.  In both of these cases, the claim (recycled or biodegradable) could be technically correct and might even be made in good faith, but still be misleading in the FTC's interpretation.

The FTC takes enforcement action against eco-claims that it believes are misleading.  Since the time of the release of the revised Green Guides in October 2012, FTC has announced several settlements of major enforcement actions, including against four national retailers for labeling textiles as being made of bamboo when the textile was rayon.  It is important to understand that it was true that bamboo was a source of feedstock that was used for the production of the rayon in the textile, but FTC considered it misleading to suggest that the textile was still bamboo after that process or that it had any ecologically-friendly qualities, considering the process involved in making rayon.   Penalties paid by the four retailers totaled $1.26 million.

Other enforcement actions addressed unsubstantiated claims that mattresses were free of volatile organic compounds (VOCs) or other chemicals; that diapers were biodegradable; and claims that paints were free of VOCs; and the Renew Plastics case described above.

Proactive Assessment of Marketing Claims

A consistent theme in FTC enforcement cases is lack competent and reliable scientific evidence to substantiate claims that might seem intuitively correct, such as the biodegradability of a product.  Without substantiation, FTC may conclude that the claim is deceptive and misleading because the public will presume that there is something to back up the claim.

The revised Green Guides include guidance as to use of claims regarding: general environmental benefits; carbon offsets; certifications and seals of approval; compostability; degradability; "free-of" a substance; non-toxic, ozone-safe; recyclable and recycled content; refillable; made with renewable energy or renewable materials; and source reduction.  Any company with products for which marketing or labeling includes claims related to these areas or other "green" attributes should review those guides carefully to ensure their view of those claims is consistent with that of the FTC.
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