Advertising Law Alert: What You Need to Know About "Green" Claims Advertising
Everyone is climbing on the "green" bandwagon. Green claims in advertising have exploded. Before you sign on for this ride, you need to know the ground rules.
Many green claims are not substantiated, are vague or unqualified, or are just plain misleading. As a result, the Federal Trade Commission (the "FTC"), which regulates unfair or deceptive advertising nationally, has focused its attention on and stepped up enforcement efforts against such advertising. Most important, it has issued guidelines on green advertising in its publication Complying with the Environmental Marketing Guides (the "Guides"), which are found here. The Guides do not have the force of law and are not binding on the FTC. Rather, they set forth the FTC staff's position with respect to what constitutes, in the context of green claims, an unfair or deceptive act or practice under section 5 of the FTC Act. State attorneys general are also active in this area, enforcing state unlawful trade practice acts and rules issued under such acts.
Here are the key points, as set forth in the Guides, with respect to green advertising:
- Substantiation. The FTC takes the position that there must be substantiation for all advertising claims, particularly green claims, and that this substantiation must have existed at the time the claim was made. The FTC's opinion (several courts have disavowed this principle) is that even if a claim was truthful, it is deceptive if substantiation did not exist at the time the claim was made. 16 C.F.R. § 260.5 states that "any party making an express or implied claim that presents an objective assertion about the environmental attribute of a product, package or service must, at the time the claim is made, possess and rely upon a reasonable basis substantiating the claim."
- What Constitutes Substantiation? Substantiation means "competent and reliable evidence." The Guides state that this often requires scientific evidence or test or research data. Relying on generalized knowledge or assumptions won't work. In the context of environmental marketing claims, "such substantiation will often require competent and reliable scientific evidence, defined as tests, analyses, research, studies or other evidence based on the expertise of professionals in the relevant area, conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results." 16 C.F.R. § 260.5.
- Specificity. The broader or more general the claim, the more likely it is to be deceptive. "Specific environmental claims are easier to substantiate than general claims and less likely to be deceptive. An unqualified general claim of environmental benefit may convey that the product has far-reaching environmental benefits, when it doesn't." Guides pg. 4. For instance, if a product is advertised as being "RECYCLABLE," the claim will be deceptive unless every component of the product and its packaging is recyclable. Similarly, unqualified claims that a product is "eco-friendly," or other general green claims, are likely to be deceptive because of lack of specificity or qualification.
- Qualification. Most green claims will need to be qualified. That means additional text in the advertising. Qualifications must be "clear, prominent, and understandable." 16 C.F.R. § 260.6(a). If the claim appears prominently on the front of the product, the qualifications cannot appear in fine print on the back of the product, according to the FTC. The FTC gives this example: A paper box containing a product says "RECYCLED" prominently on the front of the box. In small print on the back of the box is the explanation, "This carton contains 100% recycled fiber." The FTC maintains this is deceptive because the word "recycled" on the front of the box will cause consumers to think that the entire product, not just the box, was made from recycled content. Guides pg. 4.
- Comparative Claims. Comparative environmental claims should be clear about what is being compared. A claim that a product has "50% more recycled content" is deceptive, because it is not clear whether the comparison is to an earlier version of the same product or to a competitor's product.
- Overstatements and Materiality. Environmental claims often mislead by overstating benefits or failing to disclose materiality. The claim may be literally true but still misleading. The FTC used the example of an ad that says "50% more recycled content than before," in which the manufacturer increased the recycled content from 2 percent recycled material to 3 percent recycled material. This claim is technically accurate, but misleading, because consumers will assume that the use of recycled material was increased significantly. Guides pg. 4.
- Implied Claims. Advertisers often attempt to get on the green bandwagon by suggesting in some indirect way that their products are eco-friendly. This is often done through use of a symbol or photograph, such as a drawing of the earth or a picture of a green setting. To the extent that such uses imply a broad or vague claim of green or eco-friendly attributes, explanatory or qualifying text may be necessary to keep the claim from being deceptive.
- Certifications. Certifications or eco-seals, or advertisement of compliance with any set of environmental or green standards, should be accompanied by information that explains the significance of the certification or the basis for the seal of approval. If the claim implies that a third party has certified the product (which would be true for almost all certification- or seal-type claims), the certifying party must be "independent from the advertiser and must have professional expertise in the area that is being certified." Guides pg. 6.
- Use of "Biodegradable." The FTC takes a tough position on use of the term "biodegradable," at least for products that are normally disposed of as garbage going to a landfill. "Biodegradable" means that the material "will break down and return to nature within a reasonably short time after customary disposal." Guides pg. 6. Products taken to landfills do not break down within a reasonably short period of time, according to the FTC.
- Use of "Recyclable." "RECYCLABLE" means that the products can be collected, separated, or recovered from the solid waste stream and used again, which is true for an established recycling program. Any recycling claim should make clear whether it refers to the product, the package, or both. Unless the claim is qualified, the FTC takes the position that the product "must be collected for recycling in a substantial majority of communities or by a substantial majority of consumers where the product is sold." Guides pg. 8. Many products do not meet this standard.
- "Please Recycle" Claims. The FTC treats this phrase as meaning "the product or package is 'recyclable.'" Guides pg. 9. The same guidelines for making "recyclable" claims apply in this case.
- Use of the Universal Recycling Symbol. This is sometimes referred to as the "three chasing arrows" or "Mobius loop" symbol.1 It is used to communicate both "recyclable" and "recycle." Unless both claims can be substantiated, qualifying language will be needed. If "recycled" is intended, and the packaging or product is not made entirely from recycled material, the label should disclose the percentage of recycled content.
- Other Claims. The Guides discuss restrictions on use of other claims, such as "environmentally preferable," "environmentally safe," "non-toxic," "photodegradable," "compostable," and "ozone friendly." Guides pgs. 5-7, 14.
- Use of the Word "Green." The Guides contain no discussion of the use of the word "green" in connection with environmental advertising. Use of the word "green" will be subject to the guidance on use of general, vague, or broad environmental claims, meaning that explanatory language or qualifications may be needed to avoid deception.
As noted above, these points focus on the federal guidelines; states also are becoming active in regulating green advertising, so state statutes and rules will have to be taken into account.
The lesson of all this: Get advice before advertising goods or services as being green or having environmental benefits, because you will need to comply with a complex matrix of federal and state laws, rules, and guidelines. Failure to comply could torpedo an ad campaign and result in costly litigation, fines, and statutory damages. Clear any such ads with legal counsel before publishing them.
Questions or want more information? Contact:
Jere M. Webb