Last week, the FTC announced that it has reached an agreement with a company called Tested Green that will require the company to stop selling allegedly worthless environmental certifications that do not test or otherwise investigate whether the recipient companies have environmentally friendly products. The consent focuses solely on the certifying company, going to the root of the matter, rather than on the companies who used the Tested Green seal in their marketing.
The FTC’s action on this front likely will not come as a surprise to our readers. Last October, the FTC’s proposed revisions to its Green Guides created a new section for its guidance on certifications and seals of approval. (Proposed revisions summarized here.) FTC Staff has emphasized its growing concern with use of green seals to convey overreaching product environmental benefits. The proposed revisions emphasize:
- Third-party certifications and seals constitute endorsements covered by the Endorsement Guides. As such, marketers are required to disclose a “material connection,” or a “connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement.” (16 CFR 255.5)
- 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 organization.
- The use of a certification or seal by itself may imply a general environmental benefit claim. Marketers should accompany seals or certifications with clear and prominent language limiting the general environmental benefit claim to the particular attribute or attributes for which they have substantiation.
- It is the marketer’s responsibility to ensure that the certification adequately substantiates its claims. Simply possessing a third-party certification does not eliminate their obligation to ensure that they have substantiation for their claims, including all claims communicated by the certification. A marketer may rely on a third-party certification as all or part of its substantiation if the marketer ensures that the certification constitutes competent and reliable scientific evidence to support its claims.
The proposed revisions came at the end of a year that, according to the current TerraChoice report, saw the percentage of “green” home products giving the impression they are certified or endorsed by a third party where no such certification or endorsement actually exists rise to 32%, up from 26.8% in 2009. The increased use of “green” certifications has also had an impact in the trademark context.
So why Tested Green? The FTC complaint alleges that Tested Green advertised and sold “Tested Green” certifications to businesses via its website and e-mail solicitations from February 2009 through April 2010. More than 100 customers purchased Tested Green’s “Rapid” or “Pro” certification, at the price of $189.95 or $549.95, respectively. The FTC alleges that Tested Green falsely represented that it was “the nation’s leading certification program for businesses that produce green products or use green processes in the manufacture of goods and services,” stating that it “served over 65,000 certifications in the United States.” In fact, the FTC alleges, applicants for the Tested Green certification were not required to provide any information about their operations; once an applicant provided a name and address and paid the indicated amounts via credit card, he received the Tested Green certification and customizable advertising materials. Tested Green claimed that it was “endorsed by the National Green Business Association and the National Association of Government Contractors,” which were allegedly shell organizations created by an officer of Tested Green.
The FTC complaint charges three counts of violations of the FTC Act. First, “[b]y furnishing businesses with Tested Green Certifications, along with access to the HTML code for the Tested Green logo, and a ‘certification verification page’ that such businesses could edit and use to promote their Tested Green certified status, Respondents provided businesses with the means and instrumentalities for the commission of deceptive acts and practices.” Specifically, the Tested Green certification falsely represented that the products or services bearing such certification were independently and objectively evaluated based on their environmental attributes or benefits. Second, Tested Green made the false and misleading representation that it was endorsed by independent organizations. And third, Tested Green’s failure to disclose that it owns and operates those organizations was deceptive. Under the terms of the settlement agreement, Tested Green and its officer and parent company are permanently restrained and from making misrepresentations about its seal program.
“It’s really tough for most people to know whether green or environmental claims are credible,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “Legitimate seals and certifications are a useful tool that can help consumers choose where to place their trust and how to spend their money. The FTC will continue to weed out deceptive seals and certifications like the one in this case.” Whether the FTC will focus enforcement efforts on companies using third party seals, and if so, the level of due diligence the FTC will require to investigate the bona fides of the certifying body remain to be seen. The FTC is making good on its promise to continue to investigate green claims while it works to finalize the revised Green Guides.