Earth Day is coming up on April 22, and you may be looking to capture some environmentally-minded consumers with nifty green-themed advertising campaigns. But before you do, remember that the Federal Trade Commission (“FTC”) monitors environmentally-themed marketing for potentially deceptive claims, and evaluates their compliance with Section 5 of the FTC Act by reference to the “Green Guides.”
The Green Guides, located at 16 C.F.R. § 260, are a series of FTC guidelines initially promulgated in 1992 and most recently updated in 2012, the object of which is to help marketers avoid FTC actions by ensuring that environmental advertising is not deceptive. The Green Guides are also used by the National Advertising Division of the Better Business Bureau, a self-regulatory mechanism for the advertising industry, before which the veracity of green marketing claims are often challenged.
The Green Guides contain specific advice as to many common environmental marketing buzzwords, such as “recyclable” and “renewable.” They also prohibit unqualified “general environmental benefit claims.” For example, calling a product “eco-friendly” without saying why it is eco-friendly is considered a deceptive general environmental benefit claim because the term can reasonably mean a lot of different things to a lot of different consumers (recyclable, carbon-neutral, sustainable, compostable, organic, etc.); unless you can substantiate that all of those potential meanings are true, which is unlikely, the FTC may find that your ad is deceptive.
To help you sort through the FTC requirements for environmental marketing and keep up with the latest developments, here is our second annual review of disputes involving the Green Guides. The cases featured here were all resolved since the last Earth Day. You can see last year’s 2016/2017 review here.
“100% Certified Compostable”
One of the Kauai Coffee Company’s mantras is: “Don’t trash the Earth with your coffee. Brew & Renew.” Kauai offers a “100% certified compostable” single-serve coffee product which features a soft mesh-like net, thus cutting down on the landfill waste created by the traditional single serve “K-Cup” design.
Pursuant to Section 260.7 of the Green Guides, you can only call a product compostable if (a) it will break down in a safe and timely manner in a home compost pile or (b) it is accompanied by qualifying language explaining that the product cannot be composted at home and that the appropriate composting facilities are not available in most places where the item is sold. Kauai coffee included the appropriate qualifying language on its product right next to the word “compostable,” where Kauai disclosed that the product is only “Compostable in industrial facilities. Check locally, as these do not exist in many communities. Not suitable for backyard composting.”
However that disclaimer was absent or not prominent in some of Kauai’s online promotions and in an AARP Magazine advertisement. These ads were challenged by NAD, which found that the use of the word “compostable” without any qualifying disclaimer language could create the false implication that the product was also safely compostable at home. NAD recommended that Kauai discontinue or modify these claims, and Kauai agreed. In re Kauai Coffee Company, LLC, Case No. 6078 (NAD May 5, 2017).
The “Green Safety Shield”
Last December, the FTC approved a final consent order against Moonlight Slumber, a manufacturer of baby mattresses. The FTC administrative complaint charged that the company violated Section 5 by making false claims that its “organic” and “eco-friendly plant-based” mattresses had earned the “Green Safety Shield.”
Green Guide Section 260.6 states that it is deceptive to misrepresent, directly or by implication, that a product has been endorsed or certified by an independent third party. Here, according to the FTC, the “Green Safety Shield” was presented to the public as if it were a third party certification, an impression supported by the company’s website: if you clicked the “Green Safety Shield” on the website, you’d see a message telling you that the shield was “not just a marketing tool” but a “promise” that the produce went through “third party laboratory testing.” But in fact, the “Green Safety Shield” did not represent a certification from a third party; it was simply a made-up logo that Moonlight Slumber bestowed upon itself.
The final consent order prohibits Moonlight Slumber from further misleading certifications. The order also prohibits further misleading statements using the terms “organic” (which is not addressed by the Green Guides) and “plant-based” (which is indirectly addressed in Section 260.16 of the Green Guides as potentially implying the inclusion of renewable materials). In re Moonlight Slumber, LLC, Docket No. C-4634 (FTC Dec. 11, 2017).
“Made of Recycled Material”
Olivet International takes post-consumer products like plastic flower pots and transforms this “steady stream of post-consumer resin” into “food safe” products like pet food containers, which it advertises as “made of recycled material” without any further qualification. According to Section 260.13 of the Green Guides, marketers can only make unqualified claims of recycled content if the entire product or package, excluding minor incidental components, is made from recycled material. Thus, from the point of view of the Green Guides, a “made of recycled material” claim implies that a product was made entirely from recycled material, which was not true in the case of the pet food containers. In fact, Olivet discontinued this unqualified claim on its own before any formal dispute arose, and instead began claiming that its product contained “a minimum of 25% recycled material.”
Competitor Van Ness Plastic brought a complaint before NAD anyway, alleging that even the “25%” claim could not be substantiated. Van Ness argued that this number did not include lids and latches, which it opined were most likely made of virgin material because of their uniformity of color. However Olivet was able to show that its lids and latches were actually created out of 100% recycled polypropylene resin made from post-use plastic buckets and lids that had been discarded by Walmart bakeries. Therefore, NAD found that Olivet had substantiated its “25%” claim.
NAD also found that Olivet’s “food safe” claim was supported, based on a no objection letter from the FDA addressing Olivet’s ability to process recycled plastic, and other evidence that the virgin resin used in the remaining portion of the product was food safe. Van Ness Plastic Molding Company, Inc. v. Olivet International, Inc., Case No. 6149 (NAD January 22, 2018).
A putative class action was filed last year in the Northern District of California, alleging that Babyganics wipes were advertised as made from “plant-based ingredients,” when in fact they were made at least in part from polyester. Although the counts of the complaint arose out of California consumer protection and false advertising law, the assertion of deceptiveness was based in part on the premise that the “plant-based” claims violated the Green Guides. Specifically, the plaintiff asserted that the claims violated the General Principles, Section 260.3, because the lack of any qualifying language (e.g., the percentage that is plant-based; if the claim applies to the package and/or product; etc.) creates a misleading impression about whether the product is environmentally friendly. The plaintiff also alleged that the claim violated Section 260.16, because the term “plant-based” falsely implies that the product is made only from renewable materials.
Babyganics argued (in a motion to dismiss) that the use of the term “plant-based” alone did not mean it was making environmental benefit claims or that the matter was within the scope of the Green Guides, and further noted that the packaging contains plenty of indications that not all the ingredients are made from plants (further supported by the warning “Do Not Flush”). The plaintiff voluntarily dismissed the matter before the Court could rule on the motion. Machlan v. S.C. Johnson & Son, Inc., Case No. 3:17-cv-02442 (SDNY).
“Free Of” VOC
Last year, the FTC focused on the paint industry, and settled claims against four companies that were making various environmental claims in their advertising. Among the claims alleged were that the paints were advertised as “free of VOC” or containing “zero VOC,” that is, volatile organic compounds (carbon-containing compounds that evaporate at room temperature and can be harmful to humans and the environment).
Section 260.9 of the Green Guides prohibits misrepresentations about whether a product is “free of, or does not contain or use, a substance.” Here, the paint companies made various claims about the lack of VOC and other emissions, and stated that this lack made the products safe for babies, children and pregnant women. However, the FTC alleged that the companies had no evidence to support these claims.
In addition, two of the companies had affixed to their products what allegedly appeared to be third party certifications of environmental friendliness (the “Eco-Assurance Logo” and the “Green Promise seal”), but which were in fact merely titles the companies had awarded to themselves. Information about all four cases is available here.
“The Ultimate in Sustainability”
Nestle Nutrition complained to NAD about Beech-Nut’s claim that its glass containers were “the ultimate in sustainability.” Nestle argued that this was a general environmental benefit claim without qualification, and thus prohibited by the Green Guides; as noted above, Section 260.4 provides that broad terms like “sustainable” are capable of conveying a wide range of reasonable meanings, and that marketers using those terms are responsible for substantiating all of these meanings, unless the term is qualified with language that explains which meaning was intended (e.g., that it is recyclable, that it is carbon neutral, that it is biodegradable, etc.).
Here, although other parts of the ad referred to the recyclability of glass, NAD found that the “sustainability” claim stood by itself independent of other claims and was unqualified by any explanatory language. Thus, NAD recommended that Beech-Nut discontinue the advertisements in question. Nestle Nutrition USA, Inc. v. Beech-Nut Nutrition Company, Case No. 6070 (NAD April 4, 2017).