Federal Trade Commission Proposes Revisions to its Green Guides
On October 6, 2010, the Federal Trade Commission (FTC) released its proposed revisions to its "Green Guides" for public comment. Congress empowered the FTC "to prevent persons, partnerships, or corporations . . . from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce." 15 U.S.C. § 45(a)(2). The Green Guides provide guidance to companies interested in marketing the environmental advantages of their products. 16 C.F.R. § 260.
Recognizing the increasing use of "environmentally-friendly" claims, labels and seals, the FTC drafted its first set of Green Guides in 1992 and revised them most recently in 1998. But changes in the marketplace since 1998 have been "dynamic," and environmental marketing claims have proliferated. Proposed Revisions to Green Guides at 2, 8 (hereafter PRGG). Accordingly, the FTC began its periodic ten-year review of its guides one year ahead of schedule. PRGG at 8.
After years of receiving comments, holding hearings, conducting a consumer perception study and analyzing the current Green Guides, the FTC proposed its revisions. PRGG at 7-13. While the revised Green Guides still focus on providing guidance as to what may constitute deceptive environmental advertising, they strengthen and add specificity as well as new guidance. Several of the proposed revisions are worth highlighting.
First, the revised Green Guides clearly articulate that they apply to business-to-business marketing -- as opposed to what some believed to be just business-to-consumer marketing for the current guides. PRGG at 194.
Second, the revised Green Guides provide further guidance to certain previously-addressed environmental claims. Specifically, while the current Green Guides state that environmental disclosures need to be "clear, prominent, and understandable" to prevent deceptive advertising, the revised Green Guides provide that a "clear and prominent" environmental disclosure:
". . . should use plain language and sufficiently large type, should [be] place[d] [ ] in close
proximity to the qualified claim, and should avoid making inconsistent statements or using
distracting elements that could undercut or contradict the disclosure."
PRGG at 196. The revised Green Guides also provide that marketers "should not make unqualified general environmental benefit claims," because such claims are unlikely to be substantiated. PRGG at 199.
When using certifications and seals to convey an environmental-related endorsement, the revised Green Guides suggest consulting the FTC Endorsement Guides which were recently updated in late 2009. PRGG at 202. Products or packaging claiming to be compostable should break down to usable compost in a safe and timely manner "in approximately the same time as the materials with which it is composted." PRGG at 206. Likewise, a product or package claiming to be biodegradable needs to "completely decompose within one year after customary disposal." PRGG at 208. Free-Of and Non-Toxic Claims are now provided their own section expanding FTC guidance that advertising may be deceptive even if truthful when "the substance has never been associated with the product category." PRGG at 210.
Guidance for recycling claims has been more concisely articulated into a three-tier system to address when recycling facilities are available to: (1) a "substantial majority," (2) a "significant percentage," or (3) "less than a significant percentage" of the consumers or communities where the item is sold. Claims relating to the first group may be unqualified, but claims relating to the second and third group should be qualified to avoid deceiving consumers. PRGG at 213.
The revised Green Guides also provide new sections addressing recently-made-popular environmental claims. These include:
- Carbon Offsets, providing that it is "deceptive to misrepresent, directly or by implication, that a carbon offset represents emission reductions that have already occurred or will occur in the immediate future." PRGG at 201. The revised guides suggest marketers to "clearly and prominently disclose if the carbon offset represents emission reductions that will not occur for two years or longer." PRGG at 201.
- Renewable Energy Claims, providing that it is "deceptive to misrepresent, directly or by implication, that a product or package is made with renewable energy or that a service uses renewable energy. Marketers should not make unqualified renewable energy claims, directly or by implication, if power derived from fossil fuels is used to manufacture any part of the advertised item or is used to power any part of the advertised service." PRGG at 222.
- Renewable Materials Claims, providing that it is "deceptive to misrepresent, directly or by implication, that a product or package is made with renewable materials." PRGG at 224. The revised Green Guides suggest that unqualified "made with renewable materials" claims only be made if the entirety of the product is made with renewable materials; otherwise the claims need to be qualified. PRGG at 224.
The FTC will accept comments on the proposed Green Guide revisions until December 10, 2010, after which it will decide whether to make any changes final.
If you have any questions or wish to discuss how these revisions may impact you, please contact your attorney at Brinks Hofer Gilson & Lione.
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