Phil Moffat and Irene Hantman presented on the green marketing legal landscape at the Product Stewardship Conference on September 10, 2019.
The presentation opened with an overview of green marketing, noting that the number of environmental marketing claims is on the rise, with an attendant increase in the number of claims that are false and/or deceptive.
Ms. Hantman reviewed the “seven sins” of greenwashing:
- Hidden Trade-Off
- No Proof
- The Lesser of Two Evils
- Worshiping False Labels
Ms. Hantman then reported on litigation over green marketing claims. She noted that green marketing claims have been litigated in federal and state courts, in administrative proceedings before the FTC, and in private forums, and that companies face litigation from federal agencies, state agencies, and from private parties. First Ms. Hantman discussed the 2017 case ECM Biofilms v. FTC. That case began when the FTC filed an administrative complaint, ECM then appealed the agency’s findings – that ECM violated the prohibition in section 5 of the FTC Act on the use of deceptive advertising — all the way to the 6th Circuit Court of Appeals, where the court upheld FTC’s finding.
Ms. Hantman also reported that Volkswagen paid $570 million for deceptive marketing in a settlement with the Attorneys General for 41 states, Washington, DC, and Puerto Rico. That settlement was part of the litigation over Volkswagen’s use of defeat devises in “green” diesel cars.
Ms. Hantman then shared information on other FTC enforcement against green marketing claims including, the 2018 settlements against Benjamin Moore, ICP Construction, YOLO Colorhouse, and Imperial Paints for misleading claims that their products were free of emissions and volatile organic compounds (VOCs). She also reported on FTC’s enforcement against Engineered Plastic Systems in 2014. That case involved business to business marketing. Under the final FTC consent order, the company must have credible evidence including scientific proof, to support any environmental benefit claims it makes.
Ms. Hantman also provided information regarding recommendations made by the National Advertising Division (NAD), Better Business Bureau in green marketing cases brought before the NAD by competitors. She described the Olivet case in which Van Ness Plastic Molding Company challenged Olivet’s claim that its containers are made of recycled materials. She also described cases involving sustainability and energy savings claims.
Mr. Moffat then provided information on sources of regulation of green marketing claims. He discussed the role of the NAD in investigating competitor challenges and consumer complaints. He reported that all states and the District of Columbia have consumer protection statutes. Mr. Moffat also described private causes of action that consumers and competitors might pursue.
Mr. Moffat then presented information on the FTC Act and the FTC’s Green Guides. He noted that, section 5 of the FTC Act, 15 U.S.C. § 45, authorizes the FTC to take legal action against “unfair or deceptive” practices in commerce, however the statute doesn’t give FTC the authority to set environmental standards (e.g., testing protocols). He also explained that the FTC published the Green Guides to help advertisers avoid making deceptive claims under Section 5, stressing that the Green Guides are non-binding administrative interpretations. The presentation explained that because the Green Guides are non-binding administrative interpretations, they don’t preempt federal, state, or local law; compliance will not necessarily preclude FTC enforcement of Section 5; and that compliance with voluntary standards won’t guarantee Section 5 compliance.
Mr. Moffat explained that the Green Guides apply to claims about the environmental attributes of a product, package, or service in connection with the marketing, offering for sale, or sale of such item or service to individuals, businesses, or other entities; and that Section 5 applies to environmental claims in any marketing medium, whether asserted directly or by implication. He then reported on principles established by the Guides that focus on avoiding deception: “a representation, omission, or practice is deceptive if it is likely to mislead consumers acting reasonably under the circumstances and is material to consumers’ decisions.”
The presentation also discussed the need to substantiate claims. Marketers must identify all express and implied claims that the advertisement reasonably conveys, and ensure that all reasonable interpretations of their claims are truthful, not misleading, and supported by a reasonable basis. For environmental marketing claims, a “reasonable basis” often requires “competent and reliable scientific evidence.”
Mr. Moffat provided examples of the specific topics covered by the Green Guides including:
- General environmental benefit claims,
- Certifications and seals of approval,
- Non-toxic, and
- Recycled content.
The presentation then discussed general environmental benefits claims. Mr. Moffat noted that marketers should not make unqualified general environmental benefit claims as it is difficult, if not impossible, to substantiate all express and implied claims.
Mr. Moffat also reported on issues raised by seals of approval and certifications. He explained that third-party certifications and seals of approval are appealing, but stressed that companies must exercise due diligence because third-party certifications and seals are not a safe haven from enforcement or lawsuits.
Mr. Moffat wrapped up the presentation with examples of when free-of and non-toxic claims can be deceptive.
Click here for a copy of the presentation.