FTC avoids spelling out proper use of ‘natural,’ ‘organic’ and ‘sustainable,’ paving the way for continued confusion about these terms.
Marketers of consumer products touting various environmental-benefit claims finally have some closure on how to approach green advertising without running afoul of the Federal Trade Commission, said LeClairRyan partner and 17-year FTC veteran Thomas A. Cohn during an Oct. 12 business-law conference. But while the FTC’s finalized Green Guides do offer more clarity to sellers of packaged goods stamped with the likes of “recyclable,” “biodegradable” or “recycled content,” they fail to offer guidance for other terms that are in widespread use, Cohn added.
“These terms include ‘sustainable,’ ‘natural’ and even ‘organic,’ ” the attorney noted in his presentation to the 42nd Annual Advanced Business Law Conference, a Virginia Continuing Legal Education event in Williamsburg. “Still, the top-level themes of the finalized Green Guides are consistent with the proposed revisions published two years ago—namely, that marketers should not make broad, unqualified, general environmental benefit claims, because such claims are nearly impossible to substantiate and are thus deceptive.”
The FTC announced the final Green Guides, which are designed to help marketers avoid making misleading environmental claims, on Oct. 1, and the agency is unlikely to revise the rules again for another 10 years, said Cohn, who is based in the national law firm’s Manhattan and Washington, D.C. offices. “In recent years, the FTC has been more aggressive about ferreting out what it sees as deceptive or unsubstantiated environmental claims under the mandate of the FTC Act,” he noted. “The agency has targeted the claims of replacement-window sellers, makers of ‘bamboo’ clothing and sellers of supposedly ‘biodegradable’ plates and towels, just to name a few of its recent enforcements.”
Marketers thus already had good reason to study and conform to the proposed revisions of the guides, which were available online at the FTC’s website since October 2010. It is worth noting, however, that the newly finalized rules do contain some changes from those initially proposed revisions. “The FTC added guidance about the need for marketers to analyze any tradeoffs that might result from a particular product attribute that serves as the basis for an environmental benefit claim,” the attorney explained. “The agency is basically saying that if the benefit you want to highlight is true, but happens to come at a substantial environmental cost or harm, that tradeoff must be considered first.”
Packaging labeled “15 percent less content by weight,” “recycled content” or something similar, for example, might be deemed deceptive amid an untenable tradeoff. “If you have to get the content from halfway around the world, which involves a bigger carbon footprint, this may outweigh the benefit you are highlighting,” Cohn said.
In recent years the FTC has targeted companies that rely on bogus certifications to trump up their environmental benefit claims. In the final Green Guides, the agency offered further clarification regarding the use of such certifications and seals of approval, Cohn told the audience. “The final Green Guides state that such endorsements must follow the agency’s existing Endorsement Guides,” he said. “They can actually convey some general environmental benefits, but the basis for the certification or the specific environmental benefits conveyed must be clearly and prominently spelled out.”
The clarification on certificates and seals, in fact, could have a side benefit of promoting legitimate certification providers, Cohn added. “If the FTC follows up with enforcement on certifications and seals of approval, there will be a shakeout in which the bad operators go out of business and the legitimate ones differentiate themselves and prosper,” he explained. “This clear roadmap of what you should and should not do could translate into a real opportunity.”
Unfortunately, the agency’s reluctance to tackle terms such as organic, natural and sustainable might just give some wiggle room to marketers seeking to push the limits on environmental benefit claims, Cohn noted. “The purpose of these guides is to help consumers make informed purchasing decisions, and consumers do not have the ability to judge the exact meaning of many of these terms themselves,” he said. “In other words, there might be an opening for marketers to define a term like ‘sustainable’ and use it for their own purposes.”
Lastly, Cohn offered some general tips for businesses seeking to avoid an FTC enforcement action:
- Be clear and specific about environmental-benefit claims.
- Be careful about using environmental certifications and seals of approval in advertising.
- Keep marketing and compliance departments on the same page.
- Check the Green Guides carefully before using any green term.
A summary of the changes is available at http://www.ftc.gov/os/2012/10/greenguidessummary.pdf.
About LeClairRyan: As a trusted advisor, LeClairRyan provides business counsel and client representation in corporate law and litigation. In this role, the firm applies its knowledge, insight and skill to help clients achieve their business objectives while managing and minimizing their legal risks, difficulties and expenses. With offices in California, Connecticut, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Virginia and Washington, D.C., the firm has approximately 350 attorneys representing a wide variety of clients throughout the nation. For more information about LeClairRyan, visit www.leclairryan.com.
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