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Federal Trade Commission Issues Revised Guides for Environmental Claims

October 2, 2012

 

On October 1, 2012, the Federal Trade Commission (“FTC”) issued its revised Guides for the Use of Environmental Marketing Claims, 16 C.F.R. Part 260, (“Green Guides” or “Guides”). Although not rules or regulations, the Green Guides provide guidance to marketers on how to avoid making deceptive or unfair environmental claims under the FTC Act. The Guides apply to claims made in all forms of marketing, including, labeling, advertising, and promotional materials. The Guides will be important to companies that require or are subject to “sustainable practice” reviews.

Originally issued in 1992 and most recently revised in 1998, the Guides were finalized after the FTC issued proposed revisions and called for public comment in October 2010. The revised Guides modify sections of the 1998 Guides, as well as introduce new sections on issues not contained in the 1998 Guides. The revised Guides cover, among other things, general environmental benefit claims, the requirements for certifications and seals of approval, and advertising relating to carbon offsets, compostable materials, degradable materials, non-toxic substances, recycled content, ozone-friendly and ozone-safe substances, and renewable energy claims.

The following is a summary of the revised Guides. For further information, refer to the FTC press release, or the full text of the Guides.

I. Underlying Principles

Qualifications and Disclosures. Marketers should avoid making general environmental claims and focus on specific environmental benefits. Marketers should ensure that qualified claims are accompanied by clear and prominent disclosures, when appropriate.

Product, Packaging, and Service. Unless it is clear from the context, marketers should specify whether an environmental claim refers to a product, its packaging, or a service, or just to a portion of each component.

Environmental Attributes. Marketers should avoid making an environmental claim about a product if its benefits are negligible. Similarly, the claim should not overstate any environmental attribute, either directly or by implication.

Comparative Claims. Comparative claims should be clear to avoid confusion based on the comparison. Marketers should have adequate substantiation to support any comparative claims.

II. Certification or Endorsement and Seals of Approval

It is deceptive to represent that a product, package, or service has been endorsed or certified by an independent third-party, unless that party endorses or certifies the item in question. The use of a seal of approval, name, or logo of a third-party certifier may be an endorsement, and any endorsement should meet the standards in the FTC’s Endorsement Guides, 16 C.F.R. Part 255, including that any material connection between the endorser and the marketer be disclosed. Third-party certification does not remove the marketer’s obligation to have substantiation for any claim communicated through the certification or the endorsement.

III. General Environmental Benefit Claims

General environmental benefit claims, such as “eco-friendly” will be viewed by the FTC as deceptive and should not be made by marketers. Marketers should make qualified claims that focus on the specific environmental benefits of the product to prevent consumer confusion about the nature of the asserted environmental claim.

IV. Other Environmental Benefit Claims

Carbon Offset Claims. Marketers should use competent and reliable scientific and accounting methods to substantiate any claims of carbon offsets. Marketers should conspicuously disclose when a carbon offset will not take place within two years, and they should not make a carbon offset claim if the reduction was required by law.

Compostable Claims. Marketers should ensure that compostable claims about a package or product are backed by competent and reliable scientific evidence and that all materials are compostable in a timely manner. Marketers should qualify these claims if the item is not compostable in a safe or timely manner at a consumer’s home or if compost facilities are not available to a substantial majority of consumers where the item is sold.

Degradable Claims. Marketers making unqualified degradable claims should have competent and reliable scientific evidence that the entire item will break down completely and decompose within a “reasonably short period of time” (defined by the Guides as one year). Marketers should not make unqualified degradable claims about products to be disposed of in a landfill because those products will not degrade within a year.

“Free-Of” Claims. Marketers may make claims that a product is “free of” a substance if: (1) it has no more than trace amounts of a substance; (2) the substance presence does not cause material harm; and (3) the substance has not been added intentionally to the product. A truthful claim that a product is “free of” a substance may be deceptive if the product contains a substitute substance that poses a similar environmental risk and the substitute has not been associated with the product.
Non-Toxic Claims. Unqualified non-toxic claims should be made only if the product is non-toxic to both people and the environment alike.

Ozone-Safe and Ozone-Friendly Claims. Ozone-safe and ozone-friendly claims should not be made unless the product is safe for the atmosphere.

Recyclable Claims. Marketers should not make recyclable claims unless a product is capable of being recovered from waste, and any recyclable claims should be qualified if the community in which the claims are made lacks available recycling facilities. Recyclable claims may be unqualified where at least 60 percent of individuals in the community have access to a recycling center.

Recycled Content Claims. Marketers should advertise that a product contains recycled content only if it is made of materials that were otherwise designated as waste. These claims should be qualified to the extent that the product is not made entirely from recycled content. Any product that is not entirely made from recycled content should disclose the product’s amount of recycled content.

Refillable Claims. Marketers should advertise that a product or packaging is “refillable” only if the marketer provides a way to refill the product or package.

Renewable Energy Claims. Marketers should avoid making unqualified renewable energy claims unless the marketer can demonstrate that it has matched the non-renewable energy with renewable energy certificates. Marketers may avoid deception by disclosing the source of the renewable energy. Unless all, or virtually all, of the manufacturing process relied on renewable energy, the marketer should not claim that the product was “made with renewable energy.”

Renewable Materials Claims. Marketers should not make unqualified claims that a product was made with renewable materials unless the product was entirely made with renewable materials.

Source Reduction Claims. Marketers should avoid making unqualified source reduction claims without describing the basis for comparison of any claim. 

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In light of these revised Guides, companies should review their environmental claims carefully for possible compliance issues. We expect the FTC to have a renewed emphasis on enforcement in this area, and independent audits may be needed to ensure that companies have adequate substantiation to avoid becoming enforcement targets.

For earlier commentary on this subject, please see related alert.

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This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Maryanne Kane, an O'Melveny Of Counsel licensed to practice law in the District of Columbia, and Courtney Schmidt, an O'Melveny associate licensed to practice law in the District of Columbia and Virginia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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