Transcript gdevnc m 4 MacLeod 10-24

Green Marketing Claims
Regulations and Potential Liability
Presented by
William C. MacLeod, Kelley Drye & Warren LLP
zero-impact
feestock
feedstock content
sustainability
ECO-SMART
Bioenergy
renewable
cradle to grave
environmentally safe
photodegradable
sustainable
cradle to cradle
CARBON OFFSETS
CLEAN ENERGY
greenhouse gases
renewable resource
eco-friendly
life cycle
alternative fuels
energy intensity
ozone-friendly
recycled
naturally derived
non-toxic
environmentally
environmentally friendly
renewable
preferable
energy efficient
compostable
energy credits
degradable
BIO-BASED
green
purchasing
RENEWABLE
biodegradable
carbon neutral
carbon footprint
earth-friendly
environmentally safe
environmental
management
systems (EMS)
recyclable
NATURAL CONTENT
New Buzz Words Reach Washington: Green
Purchasing
Jan. 24, 2007:
 President Bush signs
Executive Order 13423,
requiring federal
agencies to procure
goods and services that
include biobased,
environmentally
preferable, energy
efficient, water-efficient
and recycled-content
products.
Standards for Green Advertising Claims
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FTC’s Green Guides – 16 C.F.R. Part 260
www.ftc.gov/energy
They do not have the force of law, but provide a
safe harbor for advertisers.
They help advertisers understand how the FTC
intends to apply Section 5 of the FTC Act.
What Does the FTC Require for all Ad
Claims?

Consumer Perception: What claims does the
ad convey to reasonable consumers?
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Substantiation: Does the advertiser have
“competent and reliable evidence” to
substantiate those claims?
General Principles of the FTC’s Green Guides
Principle #1: Qualifications and disclosures necessary
to avoid misleading consumers must be clear, prominent,
and understandable.
Example:
A company advertises its building product as “environmentally
friendly” but does not explain how it is friendly for the environment.
Using the phrase without specific qualifying language explaining
what environmental qualities the building product has is deceptive if
it leads consumers to believe that the product has far-reaching
environmental benefits that the company cannot substantiate.
General Principles of the FTC’s Green Guides
Principle #2: Claims must be presented in such a way
as to make it clear whether they relate to a product, the
packaging, and/or the company’s practices.
Example:
A cleaning product is labeled “biodegradable.” Although the
chemical cleaner is biodegradable, the spray bottle is not. By itself,
the claim may be deceptive if consumers understand the claim to
mean that the entire product, including the packaging, is
biodegradable. To avoid potential deception, it should be qualified
to say, for example, “the chemical cleaning solution is
biodegradable.”
General Principles of the FTC’s Green Guides
Principle #3: A claim must not overstate an
environmental attribute or benefit, either expressly or by
implication.
Example:
A home building company advertises its new energy efficient homes as
“guaranteed to provide a 30% decrease in utility bills.” This claim likely
overstates the benefit because there are other factors that increase the
cost of a utility bill, including utility rates, consumer behavior, and long-term
maintenance costs. The company might consider instead saying that its
new energy efficient homes “may be up to 30% more energy efficient than
a typical 10-year old home (as defined by the U.S. Department of Energy’s
Building America Program),” provided the company can substantiate such
a claim.
General Principles of the FTC’s Green Guides
Principle #4: Comparative environmental claims must
be presented in a way that makes the basis for the
comparison clear.
Example:
A washing machine is advertised as “30% more efficient.” This claim
is ambiguous because it could be a comparison to the advertiser’s
immediately preceding washing machine or to a competitor’s washing
machine. The marketer should make the basis for the comparison
clear, saying, for example, “30% more efficient than typical washing
machines were in 2006.”
Types of Advertising Claims in the Green
Guides
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General environmental benefits
Degradable, biodegradable, and photodegradable
Compostable
Recycled content
Recylcable
Source reduction
Refillable
Ozone safe/ozone friendly
Non-toxic
Environmental Seals and Certifications
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Independent from
advertiser
Professional
expertise in area
Certification does
not insulate
advertiser
Avoid broad claims
Climate Change
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Renewed attention on the Green Guides
FTC’s Workshops on Green Guides – 2008
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FTC Workshops on Specific Topics Under
Review:
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Carbon Offsets and Renewable Energy
Certificates (“RECs”) – January 8, 2008
Green Packaging – April 30, 2008
Green Buildings and Textiles – July 15,
2008
How the Green Guides May Change
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FTC’s current review of the Green Guides
focuses on new claims that are not covered
by the current Guides:
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Sustainable
Renewable
Carbon Footprint
Carbon Neutral
Bio-Based
States Are Monitoring Green Advertising
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Many states, like California, Maine, Michigan
and Rhode Island, have adopted standards
consistent with the FTC guidelines.
» California’s Original Approach:
required compliance with statespecific definitions of
environmental terms (adopted by
states including Indiana)
» New York’s Approach: official
state emblems or seals
designate compliance with state
definitions of environmental
terms.
Potential Legal Consequences Of Deceptive
Advertising
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Cease and desist orders
Refunds for consumers (redress)
Disgorgement of ill-gotten gains
Informational remedies – such as corrective
advertising, disclosures in future ads or on
product labeling
Thank You!
Questions?
William C. MacLeod
[email protected]
(202) 342-8811