Audit, Compliance and Risk Blog

A host of laws are designed to protect consumers from abusive business practices. These laws include longstanding protections against advertising that uses “false” or “misleading” advertising to induce consumers to buy products that do not perform as advertised, or that produce consequences different from those advertised. The basic U.S. federal law protecting consumers from false advertising is the Federal Trade Commission (FTC) Act, originally adopted in 1914; many states have enacted analogous provisions (in Canada, the Competition Act also provides analogous requirements). Organizations must meet these standards if they intend to make claims about their products or services, and should remember these provisions when reading materials prepared by others. 

Within the U.S., the primary national requirements for environmental advertising appear in the FTC’s “Green Guides.” The remainder of this note summarizes these provisions.

FTC Act scope and purpose

Section 5(a) of the FTC Act declares unlawful “Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce,” and section 5(b) empowers the FTC to prevent these unfair methods. Prohibitions extend to “false advertisement” relating to food, drugs, devices, services, or cosmetics.

During the century since 1914, FTC’s jurisdiction has been expanded and refined through many amendments to the original act, and by additional grants of authority by nearly 40 additional laws. FTC’s activities can be divided broadly into consumer protection and antitrust enforcement.

FTC has used its “Section 5” authority to issue what it refers to as called “Industry Guides” for a variety of industries, defining which practices, including claims made in advertising, it considers false and misleading. In general, FTC considers a representation, omission, or practice to be deceptive if it “is likely to mislead consumers acting reasonably under the circumstances and is material to consumers’ decisions.” FTC adopts Industry Guides through formal rulemakings, to guide its enforcement efforts:

"Industry [G]uides are administrative interpretations of laws administered by the [C]ommission for the guidance of the public in conducting its affairs in conformity with legal requirements. They provide the basis for voluntary and simultaneous abandonment of unlawful practices by members of industry. Failure to comply with the guides may result in corrective action by the [C]ommission under applicable statutory provisions. Guides may relate to a practice common to many industries or to specific practices of a particular industry."

FTC Green Guides

FTC’s “Guides for the Use of Environmental Marketing Claims,” which FTC refers to as the “Green Guides,” formalize administrative standards, practices, and interpretations FTC developed while investigating questionable environmental representations made by marketers. (16 C.F.R. part 260)  The Green Guides present general principles and specific guidelines, followed by examples that generally address a specific deception concern.  The current version dates from 2012.

FTC directs marketers to identify all express and implied claims that an advertisement reasonably conveys, and to 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” based on tests, analyses, research, or studies conducted and evaluated in an objective manner by qualified persons and generally accepted in the profession to yield accurate and reliable results. Such evidence should be sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that each of the marketing claims is true.

● General Principles

The Green Guides establish general principles applicable to all environmental marketing claims. These consist of the following statements and examples:

• • Qualifications and Disclosures. Any qualifications and disclosures should be “clear, prominent, and understandable,” in order to prevent any deception. Marketers should use plain language and sufficiently large type, should place disclosures in close proximity to the qualified claim, and should avoid making inconsistent statements or using distracting elements that could undercut or contradict the disclosure. 

  • Distinction between Benefits of Product and Package. Environmental marketing claims should be presented in a way that makes clear whether the attribute asserted refers to the package or the product, although that distinction may be clear from the context. If the environmental attribute applies to all but minor, incidental components of a product or package, the claim need not be qualified to identify this fact. For example, a “recycled” label on a soft drink bottle that is in fact composed completely of recycled material except for the cap is not deceptive, since consumers are likely to consider the cap a minor, incidental part of the packaging.

  • Overstatement of Environmental Attribute. An environmental marketing claim should not be presented in a manner that overstates the environmental attribute or benefit whether expressly or by implication. For example, FTC would likely consider a package labeled “50% more recycled content than before” when the recycled content rose from two to three percent to be deceptive. 

  • Comparative Claims. Claims that include a comparative statement should be presented in a manner that makes the basis for comparison clear. For example, a claim that glass bathroom tiles contain “20% more recycled material” is ambiguous. Consumers are unable to determine if the product’s bottle contains more recycled material than it previously did, or if it contains more recycled material than the competition’s packaging.

● Specific Guidance

In addition to general principles, the guidelines offer specific guidance for certain types of environmental marketing claims typically used by advertisers. FTC provides specific guidance for the following:

• • General Environmental Benefit Claims. It is deceptive to misrepresent that a product or package offers a general—i.e., unqualified— environmental benefit. FTC notes that unqualified general environmental benefit claims are difficult to interpret and likely to convey a wide range of meanings, and that these issues can readily be addressed by qualifying the claims. For example, a brand name like “Eco-Friendly” would be deceptive if it led consumers to believe that the product has environmental benefits that cannot be substantiated by the manufacturer.

  • Carbon Offsets. Given the complexities of carbon offsets, FTC advises that “sellers should employ competent and reliable scientific and accounting methods to properly quantify claimed emission reductions” and to ensure they do not sell the same reduction more than once. It is deceptive to misrepresent, directly or by implication, that a carbon offset represents emission reductions that have already occurred or will occur in the immediate future (i.e., within 2 years). It also is deceptive to claim, directly or by implication, that a carbon offset represents an emission reduction if that reduction was required by law. 

  • Certifications and Seals of Approval. It is deceptive to misrepresent, directly or by implication, that a product, package, or service has been endorsed or certified by an independent third party.  When there is an endorsement, the marketer must convey it accurately, including any necessary qualification. 

  • Compostable. A claim of compostability should be substantiated by competent and reliable scientific evidence that all materials in the product or package will break down into, or become part of, usable compost (e.g., mulch). The breakdown should occur in a safe and timely manner in an appropriate composting facility or home compost pile or device. An unqualified claim is deceptive unless the product is compostable in a home compost pile or device. 

  • Degradable. It is deceptive to misrepresent, directly or by implication, that a product or package is degradable, biodegradable, oxo-degradable, oxo-biodegradable, or photodegradable. A claim of degradability is deceptive unless the manufacturer can substantiate by competent and reliable scientific evidence that the product or package will “completely break down and return to nature (i.e., decompose to elements found in nature) within a reasonably short period of time after customary disposal” -- generally no longer than one year.  

  • Free-of. To avoid deception, the object of a claim that a product, package or service is “free-of” a specified substance not only must be free of the identified substance, but also must be in a category where that substance is used, and must not contain or use an alternative substance with the same or similar environmental risks. However, “trace” amounts can be acceptable, if they do not exceed generally-acknowledged trace or ambient/background levels, and are not harmful to consumers in the concentration present. 

  • Non-toxic. A claim that a product, package or service is “non-toxic” must be by supported by competent and reliable scientific evidence, and must be clearly and prominently qualified to the extent necessary. 

  • Ozone Safe/Ozone Friendly. A claim that a product is ozone friendly or ozone safe will be deceptive, not only if the product contains a substance that depletes stratospheric ozone, but also if the product contains any substance that will harm the atmosphere in other ways, such as by contributing to smog (which is caused in part by ground-level ozone). FTC notes that consumers do not necessarily distinguish stratospheric and surface-level ozone.

  • Recyclable. If a product or package can be collected, separated, or recovered from the solid waste stream through an established recycling program for use or reuse in manufacturing or assembling another item, then it can be marketed as recyclable. An unqualified claim can only be made if recycling facilities are available to a “substantial majority” of consumers or communities where the item is sold, which FTC opines means at least 60 percent. In addition, an unqualified claim can only be made if the entire product or package (excluding minor incidental components) is recyclable. If any component significantly limits the item’s recyclability, a claim of recyclability is deceptive. FTC considers the phrase “Please Recycle” to be an unqualified claim of recyclability. 

  • Recycled Content. Recycled content includes recycled raw material, as well as used, reconditioned, and remanufactured components. A recycled content claim may be made only for materials that have been recovered or diverted from the solid waste stream, either during the manufacturing process (pre-consumer) or after consumer use (post-consumer) – claims can distinguish between pre- and post-consumer content, but FTC does not require them to do so. An unqualified claim of recycled content may be made only if the entire product or package (except minor incidental components) is made from recycled material, and any qualified claim must be clear and prominent.

  • Refillable. A marketer should not make an unqualified refillable claim unless the marketer provides the means for refilling the package, such as a system for collection and refill of the package, or offers a product that consumers can purchase to do so. 

  • Renewable Energy. A marketer should not make an unqualified claim that a product was made with renewable energy if fossil fuel, or electricity derived from fossil fuel, is used to manufacture any part of the advertised item or to power any part of the advertised service, unless the marketer has matched such non-renewable energy use with renewable energy certificates. If non-renewable energy is used in any significant manufacturing process, the claim should clearly specify any percentages involved.

  • Renewable Materials. A marketer should not make an unqualified “made with renewable materials” claim unless the product or package is made entirely with renewable materials, “excluding minor, incidental components.” FTC suggests that the marketer identify the material used and explain why that material is renewable. 

  • Source Reduction. Claims that state that a product or package is lower in weight, volume, or toxicity, should be qualified to the extent necessary to avoid consumer deception about the amount of source reduction and the basis for comparison. For example, a claim that a product generates “10% less waste” is ambiguous and deceptive without further clarification and substantiation. 

Now what?

Scientific and practical considerations of environmental impacts continue to evolve, at the same time that these impacts continue to become more salient to manufacturers, distributors, customers, and the general public. Regulatory and enforcement attention to these issues by the U.S. federal government is increasing markedly as the new Biden administration assumes control of national governance from the recent Trump administration. Accordingly, 2021 is a good time to review environmental marketing and advertising created – and consumed – by organizations.

Self-Assessment Checklist 

Does the organization include claims about environmental impacts in marketing or advertising for any of its goods or services?

Does the organization consider the claimed environmental impacts of any goods or services it purchases?

If so, has the organization reviewed any environmental claims to ensure that they are not misleading or deceptive, including by the standards of the FTC’s Green Guides?

Where can I go for more information?

● FTC Green Guides web portal 

About the Author

Jon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 30 years. 

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).

You may contact Mr. Elliott directly at: tei@ix.netcom.com