© Copyright 2014 by K&L Gates LLP. All rights reserved.

Expert Insight on the New Federal Trade Commission’s Green Marketing Guidelines

GoGreen Portland Conference – October 16, 2014

Presenter:

Carol Pratt, Ph.D. JDOne SW Columbia St., Suite 1900

Portland, OR 97258

503.226.5762

carol.pratt@klgates.com

FTC’s Green Guides

• FTC first issued Green Guides in 1992

• FTC revised Green Guides in 1996 and 1998

• FTC proposed revisions in October 2010

• Released final revised Green Guide in October 2012

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FTC’s Revised Green Guides – 16 CFR Part 260

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Sec. 260.1 Purpose, Scope, and Structure of the Guides.

260.2 Interpretation and Substantiation of Environmental Marketing Claims.

260.3 General Principles.

260.4 General Environmental Benefit Claims.

260.5 Carbon Offsets.

260.6 Certifications and Seals of Approval.

260.7 Compostable Claims.

 

260.8 Degradable Claims.

260.9 Free-Of Claims.

260.10 Non-Toxic Claims.

260.11 Ozone-Safe and Ozone-Friendly Claims.

260.12 Recyclable Claims.

260.13 Recycled Content Claims.

260.14 Refillable Claims.

260.15 Renewable Energy Claims.

260.16 Renewable Materials Claims.

260.17 Source Reduction Claims.

FTC’s Revised Green Guides – Highlights

• Substantiation• A claim is deceptive if it is likely to mislead consumers

acting reasonably under the circumstances and is material to consumers’ decisions

• Before making a claim, must ensure that:• “all reasonable interpretations” of claim

• are truthful and not misleading, and

• supported by a reasonable basis • Often requires competent and reliable scientific

evidence

• Must substantiate explicit and implicit claims

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FTC’s Revised Green Guides – Highlights

• Substantiation• Tests must be done on actual product conditions

(industry standards are not sufficient)

• “Recyclable” claim may be misleading if there are no recycling facilities in the area where the product is marketed

• “Degradable” claim may be misleading if it will not degrade within a reasonable time in the environment where it is customarily disposed in that area

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FTC’s Revised Green Guides – Highlights

• General claims of environmental benefit• Product is generally good for the environment

• “Green”

• “Eco-friendly” or “environmentally friendly”

• “Eco-smart”

• “Sustainable”

• FTC warns against use of such claims• They are vague, misunderstood by consumers and

too broad to be substantiated

• Must add qualifiers – clearly and prominently displayed

• Net environmental benefit must be > de minimisklgates.com 6

FTC’s Revised Green Guides – Highlights

• Certifications & seals of approval• Deceptive to imply authentication by an independent

third party that, in fact, is not independent• E.g., trade association controlled by entities for which

it provides certifications

• Should not use unqualified certifications/seals of approval that do not specify the basis for the certification• Unqualified certifications/seals = general

environmental benefit claims

• Third party certification does not eliminate responsibility for substantiation

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FTC’s Revised Green Guides – Highlights

• Compostable claims• Unqualified claims

• “100% compostable”

• Are deceptive unless have scientific evidence that:• all materials in the product will decompose

• within about the same time as the materials with which the product is composted

• in an appropriate composting facility, or in a home compost pile or device

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FTC’s Revised Green Guides – Highlights

• Compostable claims• Should qualify claims if product:

• cannot be composted safely or in a timely manner in a home compost pile or device,

• May not be compostable when disposed of in a landfill

• If facilities are not available to a substantial majority of consumers or communities where the item is sold

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FTC’s Revised Green Guides – Highlights

• Degradable claims• Unqualified claims are deceptive unless have

scientific evidence that:• the entire item

• will completely break down and return to nature (i.e., decompose into elements found in nature)

• within one year of customary disposal

• Unqualified degradable claims for items that are customarily disposed of in landfills, incinerators, and recycling facilities are deceptive • These locations do not present conditions in which

complete decomposition will occur within one year

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FTC’s Revised Green Guides – Highlights

• “Free of” Claims• Claim that a product, package, or service does not

contain or use a substance is deceptive if:• The product, package, or service contains or uses

substances that pose the same or similar environmental risks as the substance that is not present; or

• The substance has not been associated with the product category.

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FTC’s Green Guides - Enforcement

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• Investigate unfair or deceptive acts/practices

• File Complaint if FTC has“reason to believe” a violation of law has occurred

• Respondent can settle or defend

• If settle:• Sign Consent Agreement - without admitting liability, consent to entry

of final order and waive right to judicial review

• FTC posts proposed Consent Agreement on website for 30 days

• FTC issues final Decision and Order

FTC’s Green Guides - Enforcement

FTC Complaint

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December 2013

FTC’s Green Guides - Enforcement

FTC Complaint (MacNeill)• Product – golf tees (“FLYTees”)

• Biodegradable claims• “FLYTees are completely biodegradable!”

• “FLYTee is made from a specially formulated sustainable bio-plastic that enables the material to maintain durability and performance, while still breaking down into CO2 and water when it is done being used.”

• Certificate of Biodegradability

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FTC’s Green Guides - Enforcement

FTC Complaint (MacNeill)

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FTC’s Green Guides - Enforcement

FTC Complaint (MacNeill)

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Note FTC offers no proof or evidence to support allegations

FTC’s Green Guides - Enforcement

FTC Complaint (MacNeill)

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FTC’s Green Guides - Enforcement

FTC Decision and Order

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December 2013

FTC’s Green Guides - Enforcement

FTC Decision and Order

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Criteria for “degradable” claim

FTC’s Green Guides - Enforcement

FTC Decision and Order

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Competent and reliable scientific evidence before claim is made

General environmental claim must be substantiated

FTC’s Green Guides - Enforcement

FTC Decision and Order

•Maintain records• For 5 years after last use of ad covered by Order of:

• All ads, labeling, packaging and promotional materials

• Substantiation data and unsupportive data

•Notify FTC 30 days before any change in the company that could affect compliance with Consent Order

•Provide to FTC within 60 days a plan for complying with Consent Order

•Consent Order terminates in 20 yearsklgates.com 21

FTC’s Green Guides – Take Home Messages

• FTC enforcement is painful

• Cannot rely on opportunity to cure (unlike FDA)

• Not a level playing field• Cannot rely on actions of competitors as protection

• FTC does not target everyone in the product class

• Assess risk before launching ads• Develop and follow SOPs

• Document, document, document• Keep documents well organized, current and ready

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Questions?

Carol A. Pratt, Ph.D., JDK&L Gates LLPPortland, OR503-226-5762carol.pratt@klgates.com