New FTC Greenwashing Rules Seen Bringing Flood of Public, Private Enforcement

Tightened FTC guidelines against greenwashing, expected early next year, could lead to a wave of regulatory enforcement and private lawsuits over what have been widespread overbroad environmental marketing claims for products, legal experts said Tuesday. The revised Green Guides will create “somewhat of a perfect storm, very ripe for activity” by the commission and by competitors suing under the federal Lanham Act or state law, said Brian Heidelberger of the Winston & Strawn law firm’s Chicago office.

"I would think there would be a hotbed of litigation,” Heidelberger said on a Strafford Publishing webcast, particularly after several years of light FTC enforcement of environmental claims. He said most “advertising claims aren’t qualified to the commission’s standards” and surveys have found that consumers don’t believe many environmental statements about products and that the vast majority aren’t true.

The seminar’s other presenter, Christina Carroll of McKenna Long in Washington, D.C., agreed that “a host of new enforcement claims” is possible with the release of the new guidelines, but she said the commission may instead sit back awhile to let the action sink in. Carroll did note “a general uptick of enforcement under the Obama administration on green-related cases."

CE makers, like manufacturers of other consumer products, will face new restrictions and responsibilities in making green marketing statements, Heidelberger said. If a handset casing were made of recycled plastic soft-drink bottles, “people would like to call this ’the green phone,'” he said. But the draft guidelines, issued Oct. 6, would require that label to be qualified so as not to create any implications of environmental-friendliness beyond what is meant and has been substantiated, Heidelberger said, including in his hypothetical any suggestion about the electronics in the phone.

Comments on the draft guides can be filed with the FTC until Dec. 10. “It doesn’t seem like the FTC is going to change its mind” on the marketing terms that will and won’t be added to the guidelines, and those whose allowed use will be narrowed, in the final version, Heidelberger said. “No general environmental-benefit claims” will be permitted, he said. “If that wasn’t clear before, it’s clear now. … You can’t just say ‘eco-friendly’ or ‘green.'”

Even qualified claims could be illegal under the draft, Heidelberger said. If a new box is “greener than previous packaging” only because the weight has been reduced, that information must be added to the claim, he said. “Green -- now contains 70 percent recycled content” would pass muster only if consumers don’t infer any environmental claims beyond the recycled content, Heidelberger said. The FTC has expressed great concern about claims that products are recyclable, Heidelberger said. The draft would make the statements subject to involved and not fully defined rules based on the availability to local recycling facilities to customers, he said.

Marketing a product as “free of” a material could be considered deceptive if the substance has never been associated with the product or if a material that is in the product poses comparable environmental risks, Heidelberger said. An inconsequential amount of a material wouldn’t bar a “free of” claim, but even a trace amount of a substance like mercury would be considered significant, he said.

The draft would require qualifications on claims to be in “close proximity” of the reality, Heidelberger said. The requirement isn’t defined, but a footnote probably wouldn’t be good enough, since the draft does specify that referring consumers to a Web address isn’t, he said. The use of seals of approval must also be qualified to prevent misunderstanding of their scope and origin, Heidelberger said.

The first Green Guides were published in 1992, and they were revised in 1996 and 1998, Carroll said. The activity this fall has been a boon to legal experts and professional-education companies. We counted seven previous seminars on the subject since mid-October, three more this week and one scheduled for Dec. 15.

The Green Guides aren’t “enforceable standards and protocols,” Carroll said. They're “administrative interpretations” to help “marketers and the public” anticipate how “the FTC would enforce the law,” she said. The guidelines not only don’t preempt state law but they're incorporated in the law of states such as California, where they can be used “as a sword” by plaintiffs and as a shield by complying companies, Carroll said.