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FTC's "Green Guides" level environmental claims playing field

By Hank Schultz , 05-Oct-2012
Last updated on 05-Oct-2012 at 18:39 GMT

Marketers making environmental claims now have a much better idea of what’s allowed and what isn’t after the release this week by the Federal Trade Commission of the latest version of its “Green Guides.”

The guides lay out how a company can avoid making what FTC would consider deceptive and misleading claims relating to recycled content, recyclability and biodegradability, among others.  The document talks about the words a marketing communication uses, the photos, logos or other images selected for the piece and the overall impression it makes.  The guidelines apply to direct-to-consumer marketing as well as business-to-business communications.

Regardless of what your position on FTC’s regulation of marketing in the industry, it’s a relief in some ways to have this document now in final form, attorney Chris Cole told NutraIngredients-USA.  Cole handles advertising concerns at the Washington, D.C.-based firm Manatt, Phelps & Phillips.

“I think having clarity is positive.  I think a lot of frustration regarding FTC has stemmed from an inability by industry to predict what the rules are. FTC has a tendency to legislate by litigation. A lot of companies in the space feel like it’s hard for us to tell what we’re supposed to do because we have to glean it from these cases and (FTC becomes) more and more aggressive over the years,” he said.

Love the Earth, but be specific

The key element of the guides is how it delineates how claims may be substantiated.  Gone are the days of vague allusions about loving Mother Nature.

There is a section of the document that prohibits broad statements, Cole said, which was something that he said had broad support within industry. “You shall not henceforth say you are ‘eco-friendly’ unless you qualify it.  Because just saying you are ‘eco-friendly’ is almost impossible to substantiate,” Cole said.

“It is incumbent upon companies to be specific in the claims they make,” said Colorado-based attorney Justin Prochnow, a shareholder in the firm Greenberg Traurig.

In the document, FTC says it will evaluate the claims made by the overall net impression of communication.  It will also evaluate the audience the claim is aimed at, in an attempt to decide how reasonable members of that group would interpret the advertisement.  Included in that assessment is how the visuals tie in the advertisement to deliver the overall message.

“You can’t just throw in a logo of a green tree without saying what it is for,” Prochnow said.

And for the different categories of claims, the revised green guides lay out the ways in which the claim may be substantiated, and the background circumstances that could cause the claim to be deceptive (a waste bag called “compostable” that will break down in a compost heap but in doing so releases toxins into the compost, for example).

Level playing field

The FTC has had green guides for about 20 years, and regulating these communications seems well within their purview, Cole said.

“They way they see it that what they are trying to do it to protect competition by ensuring a level playing field so that companies that are doing it the right way and have proper substantiation and are qualifying their claims appropriately aren’t put at a disadvantage by companies that are faking it,” he said.

Some have argued that FTC goes too far in regulating speech and thereby infringes on First Amendment rights.  But whatever the Citizens United case in the United States Supreme Court had to say about the personhood of corporations, it doesn’t extend to their free speech rights in this context.  It’s companies, not citizens, we’re talking about here, Prochnow said.  “Commercial speech isn’t free speech,” he said.

Having restrictions on what can be said in this type of marketing hasn’t had a chilling affect on the number companies that approach him for advice on how to make these claims, Cole said.  And he said most of the comments from industry he read after these revisions to the rules were released in draft form in late 2010 were generally positive.  Even if some may quibble with the particulars, what could really hurt companies trying to tout their green performance is if consumers stop believing anybody, he said.

“I think most of the companies that are responsible are already doing a lot of these things,” he said. “They hope that by having these rules the bad guys will get rooted out.

“Ultimately what would undermine the claims would be broad consumer skepticism,” he said.

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