Consumer Advertising Law Blog

After Bump in the Road, FTC Puts the Brakes on Gas Mileage Device

Although the FTC has yet to finalize the revised Green Guides over a year since the comment period ended without final action, green claims, particularly ones that stretch credulity, are still an enforcement priority.  The FTC recently settled with the marketers of the “Hydro-Assist Fuel Cell.”  The settlement brings to a close an almost three-year long litigation in the District of New Jersey over the veracity of the marketers’ claims, including that the device would “Turn Any Vehicle into a Hybrid.”  In its January 2009 complaint and TRO brief, the FTC alleged that the marketers--Dennis Lee, Dutchman Enterprises LLC, and United Community Services of America Inc. (d/b/a UCSA Dealers Group LLC)--misrepresented that the device could improve fuel economy.  The marketers claimed that the device could improve fuel mileage by 50% to 261% through a combination of mixing hydrogen produced by electrolysis with the car’s gasoline and pre-treating the gasoline so that it burned more completely.  The FTC argued that the marketers’ claims violate the laws of thermodynamics--the device has to consume more energy than it can produce. 

The court granted the TRO and set a date for a preliminary injunction hearing.  After the first preliminary injunction hearing in February 2009, the magistrate judge issued a report recommending that the preliminary injunction be denied.  The magistrate judge concluded that the FTC failed to establish that there was probable cause that the FTC Act had been violated for the following reasons:  (1) the FTC didn’t rebut the marketers’ proffered scientific evidence with specificity; (2) while the FTC’s expert was an expert in physics, he was not an expert in automotive engines; (3) the FTC’s expert had not examined or tested the device; and (4) the FTC’s expert acknowledged that adding hydrogen to gasoline could increase fuel efficiency and that a similar device being developed at MIT had potential.

In a lucky twist of fate for the FTC, the recording of the first preliminary hearing was inaudible, preventing a true transcript of the proceeding, and the court ordered a new hearing. Taking advantage of the do-over, the FTC submitted supplemental expert reports and briefing to address the magistrate judge’s concerns while maintaining that the magistrate judge had improperly interpreted the FTC’s burden.  The parties eventually entered into a stipulated preliminary injunction and ultimately a settlement agreement.

The settlement includes a $2,738,950 monetary judgment, all but $230,356 of which will be suspended upon the transfer of the assets of certain bank accounts to the FTC for consumer redress. The settlement order prohibits the defendants from marketing any product purporting to generate energy, reduce energy consumption, or improve energy efficiency. Defendants are permitted to sell their remaining stock of “Hydro-Assist Fuel Cells” as long as they don’t represent that the device generates energy, reduces energy consumption, or improves fuel efficiency and they prohibit by contract their dealers from making such claims.  Defendants are obligated to monitor their dealer’s advertising and report violations to the FTC.  With respect to other products, defendants are prohibited from making any false or misleading representations and from making representations without competent and reliable evidence.  Defendants are further prohibited from using customer information obtained in connection with the marketing and sale of the “Hydro-Assist Fuel Cell” device. 

We suspect it unlikely that the FTC will pursue vigorously cases related to claims that are new subjects of the proposed revised Green Guides until this new guidance is final.  After that time, we expect to see a flurry of enforcement activity.  In the meantime, take a hard look at any green claims and make sure they are substantiated and properly explained so consumers understand the breadth and limits to the environmental benefits your product offers.  If it looks too good to be true, know the FTC may well come knocking. 

- Matt Shultz

Seller Beware: California says “Plastic is NOT Biodegradable!”

If you were thinking of tossing that supposedly “biodegradable” plastic bottle out your car window along with that banana peel -- first of all, shame on you! But second, California says labeling a plastic product as “biodegradable” is inherently misleading and is not allowed in that state.

On October 26, 2011, California Attorney General Kamala Harris sued two makers of plastic bottles and their plastic resin supplier for advertising the bottles as “biodegradable” in violation of California law.  She accused them of “greenwashing” their products, thereby misleading consumers into becoming litter bugs.

Kamala Harris doesn’t care if you say your plastic bottle is full of special microbes that will chew it up and spit it out. You still can’t call it “biodegradable.”  Furthermore, if these microbes contaminate the recycling stream, you also can’t call your bottle “recyclable.”

The three defendants -- two are based in other states -- now find themselves caught in a web of California and federal laws and regulations that require makers and sellers of plastic products to be very careful about the “green” claims they make.

California Law - For Now

In 2008, California enacted a law that prohibited labeling plastic bags and plastic food and beverage containers as “biodegradable,” “degradable,” or “decomposable” or otherwise implying that the item would break down in a landfill or other environment. 

The 2008 law also prohibited labeling plastic bags and plastic food and beverage containers as “compostable” or “marine degradable” unless the item met specific testing standards established by the American Society for Testing and Materials (ASTM).

Beginning in July of 2011, the 2008 law also required manufacturers of “compostable plastic bags” to comply with the Federal Trade Commission Guides for Use of Environmental Marketing Claims (affectionately known as the “Green Guides”). In particular, makers of plastic compost bin liners must make sure the bags have all sorts of visual cues for consumers, like dying the bag green, or labeling both sides as “COMPOSTABLE” in big letters next to a big green stripe.

After July 1, 2011, compostable plastic bag makers also were not allowed to market their bags as “recyclable” for fear that they will “contaminate” the recycling stream.

Violators could be on the hook for civil fines up to $2,000 per violation for repeat offenders, plus court costs if the state sues and wins. But the price tag for not playing by the rules could be even higher, since the law doesn’t rule out class action lawsuits under California’s Unfair Competition Law.  And potential plaintiffs’ lawyers get free discovery: California law contains provisions requiring companies to provide substantiation for certain “green” claims to any member of the public upon request (see here and here).

California Law - Coming Soon

Beginning on January 1, 2013, the California law will be expanded to include all “plastic products” (think packaging, straws, utensils, toys, desk accessories, and virtually any other plastic consumer product you can imagine).

The rules for labeling plastic products as “compostable” will change just a little. In addition to being allowed to use the terms “compostable” and “marine degradable” (so long as you meet the relevant ASTM standard), you can also start using the term “home compostable” if you meet the certification requirements of a Belgian group called Vinçotte.  (Oh-la-la.)

But if you’re hoping to start calling your plastic product “biodegradable” any time soon, don’t hold your breath. California is sticking to its view that calling a plastic product “biodegradable” is inherently misleading.

California vs. USA: Drumroll . . . California Wins!

California’s rules -- especially the ban on labeling plastic products “biodegradable” -- are tougher than the FTC’s Green Guides.  But you already guessed that, right?

-Trent Norris and Zack Allen

Make a Splash, Avoid the Trash: Novel Swimwear Line Highlights Standards for Making “Compostable” Claims

As the summer draws to a close, it may soon be time to retire that swimsuit of yours. Maybe return it to a suitcase in the closet or under the bed. Maybe it’s seen better days and it’s time for it to be thrown away altogether. But what if there were another option? What if you could just toss it in the compost bin? That is what fashion designer Linda Loudermilk has proposed for what is claimed to be the first ever compostable swimsuit. Debuting at a Miami fashion show this summer, the “sustainable swimwear” promises to decompose within 180 days once buried under ground. As such, we thought that this novel idea presented a good opportunity to remind readers about how the proposed revisions to the FTC’s Green Guides treat claims that a product is compostable.

As we have previously reported, the FTC is in the process of revising its Green Guides, and is currently reviewing the hundreds of comments submitted in response to the proposed revisions announced last year. Under the proposed revisions, it is important to keep in mind both how long it will take a product to break down and where that breakdown will occur. First, as to the timing, the FTC’s proposal would clarify that the use of a “compostable” claim is appropriate where the product or package will break down in approximately the same time as the materials with which it is composted. That means that your compostable product -- be it swimsuit or otherwise -- must break down at the same rate as the twigs, grass, or other clippings tossed into the compost pile. As to the location, the FTC notes that although some products can break down in a compost pile in the backyard, other products will only decompose in a municipal composting facility. For the latter category, the proposed revisions state that an unqualified claim that a product is compostable is permitted only where a substantial majority (informally interpreted to mean 60%) of consumers or communities have access to composting facilities. Because municipal composting facilities remain uncommon and most consumers likely do not have access to them, unqualified claims of this nature will probably be rare. We haven’t seen specifics about the swimsuit but it sounds like it’s designed to compost in backyard compost facilities. And if your laundry pile looks anything like ours, make sure you don’t accidentally leave the swimsuit there all winter and wonder in the Spring where all the dirt came from.

- Randy Shaheen and Allyson Himelfarb

Fiji’s Green Is Clean, Says California Court

In the last decade, green claims in advertising have exploded as marketers continually seek to appeal to eco-conscious consumers interested in protecting the environment. In making these claims, companies must be careful to avoid “greenwashing,” which is the deceptive use of marketing to promote a misleading environmentally friendly image for the company’s products.

Recently, a plaintiff in California brought a putative class action against Fiji Water Co. LLC (Fiji), alleging that the company engaged in greenwashing through the labeling and advertising of its bottled water. The front label of the product in question contains a green water drop symbol and the bottled water is advertised with the slogan, “Every Drop is Green.” The named plaintiff, Ayana Hill, alleged that Fiji misrepresented its bottled water as environmentally superior to that of its competitors, and, in doing so, violated California’s consumer protection statutes. In particular, Ms. Hill took issue with the green water drop symbol, which she alleged gave consumers the false impression that the product received an environmental seal of approval from an independent, third-party organization.

A California Court of Appeals did not agree and last week dismissed Ms. Hill’s claims with prejudice. The court held that the claims failed because they did not satisfy the reasonable consumer standard as expressed in the FTC’s Green Guides or as used in California’s consumer protection laws. In other words, “no reasonable consumer would be misled to think that the green drop on Fiji water represents a third party organization's endorsement or that Fiji water is environmentally superior to that of the competition.” In reaching this decision, the court noted that the green water drop symbol bears no name or recognized logo of any group, and no indication that it is anything but a symbol of Fiji water. Moreover, the symbol appears on the back of every bottle next to the website name, “fijigreen.com,” which would lead a reasonable consumer to believe that the symbol is by Fiji water, rather than a third-party organization.

The FTC’s Green Guides and the recent Proposed Revisions are an excellent resource for companies looking to reduce legal risk and steer clear of greenwashing. The Guides are designed to inform marketers how to avoid making environmental claims that are unfair or deceptive under Section 5 of the FTC Act and they contain numerous examples addressing different types of deception. As a matter of federal law, the guides themselves are only administrative interpretations and not enforceable regulations. However, a number of states, like California, have incorporated FTC’s green guides into state laws governing unlawful environmental marketing claims.

- James Speyer & Sean Hennessy

Green Marketers, Add Something Else to Your Ad Copy Checklist: Appropriate Disposal and Recycling

The Consumer Advertising Law Blog has posted several times about the perils of making an “environmentally friendly” claim and the broad scope that the FTC and other regulators may give to such unqualified claims. However, such claims can be interpreted even more broadly than we had imagined. EarthTronics Inc., a manufacturer of compact fluorescent bulbs, just settled a case with the Massachusetts Attorney General. The AG alleged that EarthTronics’ claim that it was a good steward of the environment was misleading because it had failed to comply with the state’s program for managing the disposal of waste mercury in light bulbs. What is particularly interesting about this case is that it is not certain that EarthTronics violation actually caused any harm to the environment. Rather, the company failed to certify its compliance with the law and to provide consumers with information regarding proper disposal and recycling methods for its bulbs.

Although the requirements here were part of a Massachusetts law, is it possible that environmentally friendly claims could soon be interpreted to mean not only that a company has not harmed the environment through its activities, but also has taken proactive steps to protect the environment.

- Randy Shaheen

Green Means Go on the Enforcement Highway -- FTC Not Waiting to Finalize Green Guides Revisions

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.

- Elizabeth Frank and Amy Mudge

Commenters Assert Proposed Green Guides Restrict Information Consumers Want to Know

If you were thinking of commenting on the FTC’s proposed revision of the Green Guides, put the pen down. The comment period officially ended last month. The FTC received over 300 public comments. Many of the comments have focused on the FTC’s position that general claims such as “green” or “environmentally friendly” cannot be used unless qualified. The proposed revised Guides strengthen the FTC’s position based on consumer perception research that, unless qualified, such claims convey broad sweeping environmental benefits and cannot be used.

By way of example, the Washington Legal Foundation (WLF), a non-profit public interest law and policy center based in Washington, D.C. that advocates for free-market policies and the protection of free speech rights of the business community, filed formal comments. WLF believes that the FTC’s proposed ban on all unqualified general environmental claims is a disservice to consumers and an infringement of First Amendment rights protecting commercial speech. The FTC based its prohibition of unqualified claims on the results of a consumer perception study that asked participating consumers whether they thought a specific product advertised as “green” or “eco-friendly” possessed the following attributes: (1) recyclable; (2) made from recycled materials; (3) biodegradable; (4) compostable; (5) made with renewable energy; and (6) made with renewable materials. Because a significant number of consumers responded that they believed that a product advertised as “green” or “eco-friendly” possessed one or more of those attributes, the FTC concluded that many consumers are misled by unqualified general environmental claims. WLF contends that, in their experience, a majority of consumers are not readily familiar with the meaning of these terms and had the terms not been provided, only a small fraction would have volunteered those attributes on their own. Thus, WLF believes that the results of the FTC’s study are an unsound basis for a blanket prohibition against unqualified claims. To the contrary, WLF believes that most consumers assume that a product labeled “green” or “eco-friendly” has some unspecified environmental advantage. As long as a marketer can substantiate that advantage, it is the WLF’s view that the FTC cannot reasonably conclude that the claim is “deceptive.” In the few instances where the marketer cannot substantiate such a claim, the FTC should bring an enforcement action. A categorical ban on all such generalized claims, however, cannot pass First Amendment muster. In addition, a categorical ban as proposed by the Green Guides would deter manufacturers whose product truly contains an environmentally-friendly attribute from conveying such information due to the expense of adding disclaimers that qualify their environmental claim.

WLF also has concerns with the Green Guides’ restrictions on the use of the term “degradable.” Under the current language, marketers cannot use the term “degradable” even if it will degrade in the presence of water and oxygen if the product is likely to be disposed in environments (such as landfills) that lack those elements. In WLF’s opinion, not only does the rule cut against the commonly understood definition of “degradable” and “biodegradable”, but it also deprives consumers of information they want to have. For example, such a rule would deprive consumers of the ability to differentiate between non-degradable plastic bags and plastic bags that are degradable only when exposed to water and oxygen. Given the controversy in a number of communities over the use of plastic bags, it is unlikely that a consumer would not choose the latter if it had access to such information. WLF contends that saavy consumers already understand that “degradable” products are not likely to degrade in a landfill and that a more sensible solution to the risk that consumers could be deceived by claims that a product customarily disposed of in a landfill is degradable is to require a short disclaimer to accompany the degradable claim, such as “degradable under appropriate environmental conditions.”

Finally, WLF expressed concern over the FTC’s proposal to prohibit marketers from advertising a carbon offset if the activity that forms the basis of the offset is already required by law. Similar to their objections to the FTC’s proposed restrictions on the use of the word “degradable”, WLF believes that carbon offset advertising is information consumers want to know, regardless of whether the activity is being done voluntarily or is required by law. Thus, given the importance some consumers place on carbon offsets, a company’s motivation for participating in carbon offset programs should be irrelevant to whether a company can advertise this activity.

While it will take the FTC Staff some time to review the many comments and consider whether and how to incorporate them into the revised Green Guides, we would expect to see final guides sometime this spring or early summer, followed by heightened FTC enforcement in the environmental marketing area.

- Amy Mudge and Chester Choi

NAD Rebuffs Biodegradable Claims of Packing-Peanut Manufacturer

While the FTC reviews the many comments received relating to the proposed revised Green Guides, the National Advertising Division (NAD) continues to opine on the level of substantiation needed to make various green claims. The latest of which is its opinion (summary) on the use of the term “biodegradable” by FP International (FP), a company making a packing material called “Biodegradable Super 8 Loosefill”, commonly known as packing peanuts. The Super 8 product is made from recycled polystyrene and is a member of what FP calls its “Green Family” of environmentally-friendly products.

One of FP’s competitors, Starchtech, Inc., a company whose packing materials are made from starch, challenged green-friendly claims made by FP on its packaging as well as in various advertising materials. Promotional statements highlighted FP’s claim that the Biodegradable Super 8 Loosefill product was biodegradable and would “decompose completely within 9 to 60 months” [whether in a landfill (without air) or if littered elsewhere on the ground (with air)]. NAD also examined some of FP’s more-general claims, including those stating that its products were more environmentally-friendly than products made from starch.

TerraChoice’s Greenwashing Report

TerraChoice has just released its most recent greenwashing report entitled The Sins of Greenwashing: Home and Family Edition. While TerraChoice is not a government agency, its report takes cues from the Federal Trade Commission’s Green Guides, the most recent of which is currently up for public comment. The FTC’s Green Guides discuss current environmental issues and lists potential “green” claims.

The TerraChoice report starts off by indicating that there have been both positive and negative developments in the past year, highlighting the fact that the amount of greenwashing has gone down slightly and “the number of ‘greener’ products has gone up by 73%.” TerraChoice’s methodology includes visiting the same locations and looking at the same products, comparing “green” claims from year to year. The problem is that while there are more green products available, 95% of “greener” products commit one of TerraChoice’s seven “Sins of Greenwashing,” which are described on the tenth page of the report. Baby products, toys, household cleaners, construction materials, and consumer electronics were the product areas in which TerraChoice found the most greenwashing.

The report also found that “big box” stores such as Wal-Mart and Target provide the broadest set of green products with legitimate environmental certifications. According to TerraChoice, these big box stores offer a higher percentage of products with legitimate green certifications, have more products that are free of greenwashing, and have a larger overall selection of green products.

As part of its findings, the report offers companies tips on “good green marking”:

1. Use honest statements to describe the total life-cycle impacts your product will have on the environment,
2. Don’t overstate your impact, as customers will be happy that you’re taking steps in the right direction; and
3. Ask your customers to support your green journey.

By following these steps, companies will be able to take advantage of their green status while helping a good cause. In fact, the study found that legitimate green labeling occurred most often in mature, experienced product markets.

Throughout the report, TerraChoice also attempts to show consumers how they can use their purchasing power to create a greener world, focusing on progress that has been--and can be--made. The report recommends seeking out products with legitimate, certified labels such as EcoLog, Green Seal, and Nordic Swan. For a full list of legitimate environmental standards and certifications, see page 30 of the report.

While steering clear of greenwashing may be important for business and policy reasons it’s worth pointing out that not all greenwashing practices are necessarily unlawful. For example one of the greenwashing “sins” is the Sin of Lesser of Two Evils. According to TerraChoice this is when environmental qualifiers such as “organic” or “green” are placed on products in which the entire product category is of questionable environmental value. For example, labeling a hybrid SUV as “green” might be greenwashing. However, from the standpoint of Section 5 there is nothing unlawful about promoting a hybrid SUV as having less of an environmental impact than a conventional SUV. Such claims, assuming they are substantiated, allow consumers to make informed choices about lawful products.

- Randy Shaheen and Michael Thorpe

A Closer Look at Proposed Green Guides Revisions: Spotlight on Offsets

When the Green Guides were first issued in 1992, Time Magazine had not long ago run a cover story on the coming ice age, Tipper Gore was arguably the more famous of the Gores, cows were known for producing milk not methane, and folks still remembered that carbon was something you put between two sheets of paper when you were typing and wanted a second copy. In other words, nobody much worried about carbon emissions or offsetting them.

A lot has changed.

In its proposed revisions, the FTC takes a first, tentative step to providing guidance on carbon offset claims. However, there are still a number of areas where the agency (for now) has decided not to provide guidance. Even so, of course, the FTC retains the right to proceed under Section 5 if it finds a particular claim misleading.

So where has the agency provided direction?

First, you can't claim you're free of something if you contribute to the same or a similar environmental harm through other means. So, if you've offset your carbon but emit a not insignificant amount of other  greenhouse gases, and haven't offset those, then an unqualified carbon offset claim may be misleading.

Second, the greenhouse gases a company offsets are already in the atmosphere, but, depending on the type of offset, it may be years before those emissions are fully offset. For example, if you plant a tree today, it will "offset" carbon dioxide as it grows and matures . . . or it could get hit by lightening, struck by a car or gnawed down by a beaver and offset little if any carbon. Companies' practices have differed in how they deal with this issue. However, the proposed revision states that for an offset claim to be unqualified, the offset must fully occur in less than two years.  The Commission, however, is specifically seeking comments on this proposal.

The FTC partially answered the question of "additionality," i.e. if the tree would have been planted anyway, can you count it as an offset?  The agency stated that there were too many unresolved "technical and environmental policy issues" for it to propose any guidance with respect to additionality, but the agency did propose that, if the offset activity is required by law, it cannot be marketed as an "offset."

What is a legitimate offset? There has been scientific debate as to whether some activities truly offset carbon emissions (think iron fertilization to create plankton blooms). The FTC declined to provide guidance in this area. Nor do we think you should expect them to do so anytime soon, as this is largely a scientific and not a consumer perception issue. Specifically the Commission noted that identifying allowable offset projects would put the Commission in the role of setting environmental policy. The Commission did, however, make clear that offset claims must often be substantiated by competent and reliable scientific evidence.  The FTC also cautioned that companies should be wary in using RECs (renewable energy credits) as offsets in part because of issues relating to additionality and possible double counting by the REC generator and fossil fuel-fired facility.  Finally, the Commission warned that such obvious misleading practices as selling the same offset twice would constitute a violation of Section 5.

Last, but not least, the Commission also did not provide guidance on how companies should measure the carbon they claim to be offseting. For example, two companies may make similar products, but one obtains a lot more components from third parties. As a result, even though overall the carbon emission from the manufacture of the two products may be similar, one company may have far less carbon to offset if it considers only its own emissions. Is there an obligation to look "downstream" at least to some degree, particularly if the offset claim is an unqualified one?  In a similar vein, the Commission requested guidance on whether an unqualified claim that a product was manufactured using renewable energy would be interpreted to include other parts of the distribution chain, such as delivery trucks. We note that when addressing the use of Made in USA claims by manufacturers the Commission has indicated that materials sourced from third parties often must be included in the relevant calculation. 

Given the emerging nature of these claims and the as yet unresolved scientific debate surrounding some of these issues, expect to hear more from the Commission in the future, either through law enforcement activity or additional guidance. 

- Randy Shaheen

A Closer Look at Proposed Green Guides Revisions: Spotlight on Biodegradability

We posted yesterday on the FTC's proposed revisions to its Green Guides. As a follow-up, we will post periodically with more details on specific issues addressed in the FTC's proposed revisions. First up is "biodegradable/compostable". 

Biodegradable - Solids

Most stuff, at least solid stuff, we throw away ends up in landfills; 66% ends up in landfills or incinerators according to the FTC.  Landfills are dark places with little if any air and water.  Not only are these things necessary for all of us to survive, they're also essential for the natural processes that lead to biodegradation.  Degradability claims account for the highest number of environmental marketing cases, and the FTC has brought a number of cases, including some recent ones, challenging biodegradable claims for products which are destined to spend their eternal rest in landfills.  At the same time, science is working to solve this problem. For example, NAD addressed a claim that a plastic bag was oxo biodegradable, and a running shoe company is touting a sneaker midsole that it claims will biodegrade in landfills.  In both cases, however, the products still required a significant amount of time to biodegrade; 2-3 years in the case of the plastic bag and 20 years for the sneaker product. 

In its proposed revisions, the FTC has decided that a bright line rule might be easier for everyone.  So it's out with "decompose . . . within a reasonably short period of time after . . . disposal" and in with "must completely decompose within one year."  This "one year" rule is based upon consumer expectations as to how long it should take for a biodegradable product to decompose.  Of course, since Section 5 is all about disclosures, you can still make a biodegradable claim if the process will take longer than a year but you have to qualify the claim by stating how long it will take. So the next time you buy paper plates perhaps you'll see the claim -- "Biodegradable**in several hundred years."  Despite being urged to do so, the Commission also declined to endorse any particular testing protocol because it could not identify any that accurately replicated the heterogeneous conditions typically found in landfills.

Bottom line - Don't expect to see many biodegradable claims for solid waste.

ABA Event: The Revised FTC Green Guides - A Summary from the FTC

The Private Advertising Litigation Committee, the Consumer Protection Committee, and the Federal Civil Enforcement Committee of the ABA are co-sponsoring a teleconference next Tuesday, October 12, 2010 from 3:00 to 4:00 pm EST regarding the revisions to the FTC's Green Guides, which were released yesterday.

James Kohm, Associate Director of Enforcement for Bureau of Consumer Protection at the FTC, will provide an overview of the revisions. The event will be moderated by Amy Mudge of Arnold & Porter LLP and Dana Rosenfeld of Kelley Drye & Warren LLP.

Register here if you wish to dial in to the event. The event is free.

We encourage our readers to view our recent posting (found here) summarizing the changes to the Green Guides.

 

FTC Announces Proposed, Revised Green Guides--More Guidance on Appropriate Shades of Green

The much anticipated proposed, revised Green Guides were announced today (the FTC's news release can be found here).  Why did the revisions take longer than expected?  The need for evidence, according to Jim Kohm who gave a preview of the revisions at the NAD annual advertising conference earlier this week.  Mr. Kohm explained that the FTC "kept the Guides the way they were unless we had evidence supporting a change."  The evidence collected, through workshops and consumer perception studies, is reflected in the new Guides, and the FTC Staff during the comment period is particularly interested in gathering more.  The new Guides include some updates to prior guidance, address some entirely new claims, and declined to provide guidance in other areas. 

What's Revised?

• General Green Claims: The suggestion that general environmental claims be avoided has been strengthened considerably.  The consumer research showed that half of consumers took away from a "green" or "environmentally friendly" claim a broad meaning of widespread environmental benefit.  Any such claims should be qualified (e.g., Green = compostable).  Marketers should look closely at the net impression conveyed by an ad or label, including the visuals and use of any seals or certificates to make sure the benefits are not overstated.
• Certificates and Seals:  These are endorsements and as such any material connection to the certifying party must be disclosed.  If the product is self-certified by the manufacturer, that must be clear.  If a trade association is providing the certification and the marketer is a member of that association, this must be disclosed.  If the name of the certifying party is general (e.g., Green Smart v. Biodegradable Association), the basis for the certification must clearly accompany the certification. (e.g. "certified  for reduced chemical emissions during product usage.")  The standards themselves used for the certification presumably do not have to accompany the seal.  Thus, if a consumer or business wants to evaluate differences between products certified by competing certifying organizations or seals they will likely have to look for that information on the certifying organizations website.  This provision is is not new but some of the guidance that was found in the examples in the old Guides was moved up.
• Biodegradable:  For an unqualified claim, solid waste products must biodegrade in one year from disposal.  Anything destined for a landfill, reclycling center, or incinerator cannot include this claim because in the FTC's view decomposition will not occur within one year.  If such products will biodegrade in more than a year a qualified claim can be made that discloses the time in which the product is expected to biodegrade.  The example given for a product where an unqualified biodegradable claim may be appropriate is a planter that is intended to be put into the ground.  The Commission is seeking comments with respect to the standards for decomposition of liquid waste. 
• Compostability:  A product with such a claim must compost at the same rate as twigs, grass, and clippings, or be qualified.
• Recyclable:  The Guides ask for comment on the percentage of recycling centers in the marketer's sales area that must recycle a given product befor (1) an unqualified recycling claim can be made; (2) a qualified claim can be made ("may" not be recyclable"); (3) and a further qualified claim should be made ("only in the few communities that have recycling programs."  Staff has recommended 60% as the cut off for an unqualified claim.  However, no additional guidance is provided to determine how convenient a recycling facility must be before consumers are deemed to have "access" to it.  A "please recycle" reference is still seen as an affirmative recyclable claim.
• Ozone Safe:  The revised Guides have taken out the dated reference to HCFC claims, but have kept guidance on "no CFC" claims.
• "Free Of":  If a product removes one harmful ingredient but has another harmful ingredient that poses the same or similar environmental risk, a "free of" claim is not appropriate.  If the product never included the referenced ingredient and no products in the category include the ingredient then a "free of" claim could be deceptive as it may imply that competing products include the offending ingredient.  On the other hand the Commission noted that such information may be useful when comparing two different types of competing products, one type of which contains the harmful material and the other does not.   The Commission is seeking comments on the appropriate treatment of such claims.  The Staff did conclude that use of a "free of" claim is likely acceptable even if the product contains trace or de minimus amounts of the ingredient.  However, trace amounts of highly toxic materials such as mercury would be material to consumers and cannot be labeled "free of." 

What's New?

• Made with Renewable Materials: The Guides propose that marketers qualify the claim if the item is not made entirely of renewable materials and specify what the renewable material is, how it is sourced and why it is renewable.  The Commission is seeking comments specifically on these proposed qualifications. 
• Made with Renewable Energy: The Guides propose that unqualified claims are misleading if any part of the product was manufactured with energy derived from fossil fuels.  Specific guidance is not proposed regarding parts sourced from third parties but the Commission cites to its Made in USA standards which often require manufacturers to account for parts sourced from third parties.  The Commission asks for comments on whether the criteria for use of an unqualifed claim should extend to product distribution as well as manufacture.  The Guides also propose that marketers specify the source of the renewable energy and that renewable energy claims may not be made where the manufacturer generates renewable energy but sells RECs for the renewable energy they generate. 
• Carbon Offsets: The Commission opted to provide only limited advice in this area because of the limited extent of its authority and consumer perception evidence and ongoing debate among experts as to the appropriate standards for offset claims.  However, the Guides propose that marketers use appropriate accounting methods to properly quantify their emission reductions and to insure that they are not selling their reductions more than once.  Further, in the absence of a disclosure, it is assumed that the offset will occur in less than two years.  Finally, while the Commission decided not to address the thorny issue of additionality, the revised Guides do propose that if the basis for the offset is already required by law, the offset should not be advertised.   

What's Not Tackled?

• The Guides do not harmonize completely with international standards or adopt ASTM standards.  Mr. Kohm explained that many of the standards have a purpose beyond deception, but the FTC is not an environmental policy setter. 
• Sustainability
• Life Cycle Analysis
• Organic: The Guides do not address organic claims  Mr. Kohm said the FTC did not want to get ahead of the USDA in this area.
• Natural: While a big disappointment to some, the Guides are silent on "natural" claims as the FTC did not conduct research in this area and had no evidence to provide guidance on such claims at this point.

- Amy Mudge and Randy Shaheen

FTC Commissioner Brill Reviews Consumer Protection Headliners at NAD Conference -- Revised Green Guides Expected Tomorrow!

It has been an exciting two days at the National Advertising Division's Annual Advertising Law Conference. I moderated a panel where the FTC BCP Director of Enforcement, Jim Kohm, announced that the revised proposed Green Guides will be made available at 11AM EDT on October 6th. (Return here tomorrow for all the details!)

Commissioner Brill provided the keynote address yesterday where she gave a preview overview of the changes. By way of background, she reminded the audience that the original Green Guides, first published in 1992 and updated in 1996 and 1998, provide both general and specific guidance on how to make truthful and substantiated environmental marketing claims and "are more relevant than ever before." She said such claims can be important to environmentally conscious consumers, but only if true, particularly because these are largely credence claims or claims consumers cannot determine based on use if the product actually possesses the touted benefit. She said there were over 450 attendees to the three 2008 green workshops held by the FTC Staff. Further, the FTC commissioned consumer research on how consumers understand general environmental claims and specific claims such as biodegradable, renewable energy, renewable materials, and carbon offsets. The Guides needed updating to take into account new science and current consumer impressions of such claims. With the publication of the proposed Guides come a number of specific questions to which the FTC staff is soliciting comment. Commissioner Brill also said the staff is very interested in receiving evidence during the comment period, particularly any consumer perception studies others may have conducted. The goal of the new guides is to "provide better, evidence-based guidance."

Here is a preview of what can be expected tomorrow:

1. The proposed Guides strengthen that unqualified general environmental claims should be avoided. The consumer research found that when consumers saw a "green" or "environmentally friendly" claim that they took away that the product had specific and far reaching environmental benefits (e.g., nontoxic, recyclable, made with recycled content) and few products do all of these things. Use of such general claims, to avoid running afoul of Section 5, will need to be qualified clearly and conspicuously to tell consumers the specific environmental benefit(s) they can expect.
2. Use of Seals of Approval or environmental certificates will be treated like endorsements and should meet the criteria outlined in the FTC's Endorsement and Testimonial Guides. If the seal of approval is provided by a trade association in which the advertiser is a member, this must be disclosed. If the seal is not a third party seal, but issued based on an advertiser's internal certification program, this must be disclosed. A seal itself can claim a general environmental benefit, and qualifying language must be included making clear the expected benefit(s).
3. There is the potential for consumer deception through use of renewable energy and renewable materials claims, and so marketers must include language making clear what is renewable (e.g. use of wind energy in manufacturing).

Commissioner Brill also discussed the FTC's new substantiation language in its recent consent orders with Iovate and Nestle and in the notice complaint filed in the action against Pom. She said the new language is designed to improve the enforceability of the orders.While some have said this represents a shift to a more rigorous substantiation requirement and a departure from the standards articulated in the FTC's Deception Policy Statement, "reports of [the flexible substantiation standard's] demise are greatly exaggerated -- it is alive and well." She explained that the two clinical studies required to support future claims contained in the orders was based on agreement by the FTC's experts that this was the level of substantiation required in these particular cases. She said going forward that the FTC "will use the new provisions on a case-by-case basis depending on what experts say is needed for the claims at issue."

She also reviewed the revised Testimonials and Endorsement Guides, which "confirm that well-settled truth in advertising principles apply to new media" and provide "important new and expanded guidance" that she is "confident industry will put into practice." We plan to blog further about this later in the week when we will detail comments provided by Mary Engle, Director of Advertising Practices, on enforcement of the new guides in the year since they were issued. Stay tuned!

- Amy Mudge

Schwarzenegger Throws Out Ban on “Biodegradable” Claims, Makes FTC’s Green Guides the Rule for Compostable Plastic Bags

As we previously reported, on August 25, the California legislature passed S.B. 1454, a bill that would have prohibited labeling any plastic product sold in California as “biodegradable,” “degradable,” or “decomposable,” based on the theory that such claims were inherently misleading to consumers in the absence of clear scientific standards supporting these claims.

On September 28, Governor Schwarzenegger vetoed the bill. In the veto statement, the Governor cited his concern “about the much more expansive universe of plastic products that this bill would regulate and the unforeseen consequences that could result from such a vast expansion.” Instead, the Governor said, he signed S.B. 228, pertaining to compostable plastic bags, which “represents a reasonable next step in providing information to the consumer and recyclers about the differences in biodegradable products.” The new law enacted by S.B. 228 aligns California law with the FTC’s Green Guides. Specifically, starting July 1, 2011, manufacturers of compostable plastic bags meeting specific ASTM standards will be required to ensure these bags are “readily and easily identifiable” from other plastic bags, “in a manner that is consistent with the [Green Guides].” Under the statute, “readily and easily identifiable” means: (1) labeled with a certification logo indicating the bag meets the ASTM standard; and (2) the bag is green and labeled with the word “compostable” in one-inch letters. A compostable bag may not display a recycling symbol, such as a chasing arrow resin identification code. The statute expressly provides that “[a] manufacturer is required to comply with this section only to the extent that the labeling requirements … do not conflict with the Federal Trade Commission Guides for the Use of Environmental Marketing Claims.” Thus, Governor Schwarzenegger stopped California from regulating biodegradable claims more strictly than the rest of the country, preserving the possibility of uniform nationwide environmental marketing standards, at least for now.

- Suzanne Wilson and Elizabeth Frank

Is It Something in the Soil? “Not Biodegradable in California” Disclaimers Likely to Increase

Summer is ending, and the highly anticipated revisions to the FTC’s Green Guides have still not arrived. As regular readers will recall, the FTC issued its Green Guides in 1992, partly in response to manufacturers’ requests for a uniform standard for making environmental claims. (For additional background, see here.) The current Green Guides allow biodegradability claims if the claim is substantiated by competent and reliable scientific evidence and qualified to the extent necessary to avoid deceiving consumers about the product’s ability to degrade in the environment where it is customarily disposed (i.e., landfills) and the rate and extent of degradation.

California has taken a different approach to these labeling claims. On August 25, the California legislature passed a law that would prohibit labeling any plastic product sold in California as “biodegradable,” “degradable,” or “decomposable.” Senate Bill 1454 now awaits action by Governor Schwarzenegger, who must approve or veto all bills by September 30. SB 1454 includes strong findings that, because there is no American Society for Testing and Materials (ASTM) standard specification for the term “biodegradable” for plastic, the term is inherently misleading to consumers. The bill states that consumers are more likely to litter a plastic item labeled “biodegradable,” which results in harm to the state and its environment.

Current California law prohibits labeling plastic bags and food packaging with the terms “biodegradable,” “degradable,” or “decomposable.” An example of the results of the current California law is evident in the label on the package of a popular brand of doggy waste pick-up bags. S.B. 1454 expands the scope of products subject to these labeling restrictions to include all products made of plastic or plastic components. Marketers would still be permitted to label a product “compostable” or “marine degradable”  if and only if the product meets the applicable ASTM standard specification at the time of sale. The bill provides for civil penalties for the violation of the law and expressly states that the remedies in the bill do not preempt consumer protection laws such as California’s Unfair Competition Law.

National marketers will hold their collective breaths to see whether other state legislatures also seek to set standards for environmental marketing claims. If they do, it will be difficult to realize the goals of uniformity and predictability envisioned by the FTC Green Guides. Absent uniform standards, consumers are likely left more confused, not less, by a patchwork of labeling requirements. We hope a consistent nationwide approach to environmental marketing regulations is adopted, but stay tuned here for future developments.

- Suzy Wilson and Elizabeth Frank

Can the FTC Use the Green Guides to Challenge Corporate Environmental Image Advertising?

A recent law review article in the Penn State Environmental Law Review, "Thinking Green or Scheming Green? How and Why the FTC Green Guide Revisions Should Address Corporate Claims of Environmental Sustainability," (permission to post received from the Author, the Law Review, and Westlaw) focuses renewed attention on whether the FTC has jurisdiction over corporate imaging advertising. The article assumes that the FTC’s green guides do not currently encompass general claims by corporations that their business practices are “environmentally friendly, socially responsible, and sustainable” and calls upon the agency to expand the reach of its Green Guides to cover such practices. As the law review article points out, many corporations want to be considered “green” not only to bolster their image, but also to remain competitive in their respective industries.

One of the key issues here is whether the First Amendment permits the FTC to pursue Section 5 cases against allegedly misleading corporate image advertising. Opinions on this issue are divided. FTC Commissioner Rosch, in a speech at the National Advertising Division’s annual law conference. expressed the view that whether the First Amendment protects corporate environmental image advertising poses “difficult constitutional issues.” He concluded that the first amendment “shield” is likely available to many corporate image environmental ads regardless of whether the “message” is true or false. However, he went on to say that he does not believe that all such ads are shielded, particularly those that may be “predominantly commercial in their purpose and effect.” He concluded that “the closer the image claims are associated with specific branded products…the less likely it is that the First Amendment provides absolute protection.”

The California Supreme Court in a 2002 case reached an arguably narrower conclusion about the scope of the First Amendment. In a challenge to an advertisement by Nike relating to working conditions in its overseas factories the California Supreme Court reversed the lower court and concluded that “because the messages in question were directed by a commercial speaker to a commercial audience, and because they made representations of fact about the speaker’s own business operations for the purpose of promoting sales of its products, . . . [the] messages are commercial speech.” [Nike v. Kasky 45 P.3d 243] The U.S. Supreme Court had an opportunity to review the Nike case and perhaps offer some more concrete guidance in this area but determined instead that certiorari had been improvidently granted.

So, making sure that your corporate image environmental advertising is accurate may just be a good business practice or it may be a smart legal practice as well.

- Randy Shaheen and Danielle Sims

What's in Your Shampoo? Group Seeks to Expand USDA Authority to Regulate Organic Products

The Department of Agriculture regulates organic agricultural products through the Organic Foods Production Act of 1990 ("OFPA") and its National Organic Program ("NOP").  However, the regulatory status of personal care products has long been uncertain.  In 2008 USDA stated that such products could not falsely claim or imply that they meet USDA organic standards but that USDA did not otherwise have jurisdiction over the labeling of personal care products that are not made up of agricultural ingredients.  In 2009 the National Organic Standards Board recommended that the NOP regulations become mandatory for personal care products.  However, no action has been taken on that recommendation.  Finally, in a 2009 Lanham Act case a number of personal care product companies successfully argued that a claim that some of their products were falsely labeled as "organic" fell within the purview of USDA and must first be pursued there. 

That victory may turn out to be pyrrhic.  Recently the Organic Consumers Association ("OCA") and three organic personal care manufacturers filed a complaint with USDA against thirteen personal care product companies.  The complaint alleges that each of the thirteen companies processes agricultural products and manufactures personal care products that are labeled and sold as "organic."  However, the complaint alleges that the products consist primarily of non-organic agricultural material, including numerous petrochemicals, and that most products only contain water extracts of organic herbs and/or reconstituted aloe vera organic powder concentrate.  The complaint requests that USDA impose civil penalties for mislabeling and order the companies to cease and desist from labeling their products as "organic."

OCA's view is that USDA has the authority under the OFPA to impose civil penalties on any person knowingly labeling a product "organic" that is not in accordance with the Act.  If USDA adopts OCA's position, it could lead to a significant expansion of USDA's authority to regulate organic products.  In the meantime, OCA is also waging war on the public relations front.  Members of the group dressed as large shampoo bottles (we presume, nonorganic) stood outside the National Products Expo West mocking the allegedly offending products and handing out flyers detailing the lack of regulation on organic personal care products. These efforts may be bearing fruit.  Just today OCA announced that Whole Foods will tighten its requirements for organic claims on personal care products.    

- Randy Shaheen & Jessica Halbert

FTC Asks Once Nicely - Warning Letter to Retailers Seeks to Cut Down Deceptive Bamboo Labeling

After bringing recent enforcement actions against several companies for falsely advertising products as “100% bamboo fiber” when they were in fact made of rayon, the FTC sent out a warning to more than seventy-eight companies urging them to review their bamboo products and correct any misleading labeling. (Although rayon is created from the cellulose found in trees and plants, including bamboo, it is a man-made fiber that is processed with harsh chemicals and not considered to be environmentally friendly.) The FTC hopes that the warning letters will “serve as a wakeup call to all companies, regardless of their size.”, and the letters went to well known names as Bed, Bath & Beyond and Amazon.com. 

The warning letters contain a synopsis of FTC decisions regarding the use of proper fiber names in textile labeling and advertising, and are intended to give companies time to take curative steps by removing or correcting any false or misleading bamboo references. If any of the letter recipients is later found to have mislabeled rayon products, the FTC can seek civil penalties of up to $16,000 per violation. The warning letters, as well as the recent enforcement actions brought against companies selling rayon, highlight the FTC’s continuing commitment to prosecute misleading “green” advertising.

While the FTC is still working on revisions to its Green Guides, the Commission is struggling with the appropriate limits to place on marketers, so as not to allow them to convey to consumers a deceptive and overly broad message while touting benefits of a product for the environment. However, in its decisions regarding bamboo, the FTC made it clear it would be appropriate for companies to advertise “Rayon Made with Bamboo,” which truthfully conveys the fact that the manufacturers used bamboo to make the rayon but does not overstate the benefits of the product. Marketers should take a close look at any environmental claims being made about their products and make sure any limitations are clearly conveyed with appropriate disclaimers. 

- Danielle Sims and Randy Shaheen

Claims of Alleged “Greenwashing” Squeak Past Motion to Dismiss

While marketers await the expected overhaul of and revisions to the FTC’s Environmental Marketing Guides, the existing FTC’s Green Guides should not be ignored. For example, the Guides advise that use of seals of approval should be accompanied by information that explains the basis of the award. Further, if the seal implies that a third-party has certified the product, the certifying party must be independent from the advertisers and have professional expertise in the area that is being certified. The FTC warns marketers against using environmental seals suggesting that a product is environmentally superior to other products if the manufacturer cannot substantiate this broad claim.

Recently, the Northern District of California denied S.C. Johnson & Son’s motion to dismiss state law claims for unfair competition and false advertising arising from SCJ’s labels for its Windex and Shout products (find the opinion here). The plaintiff, whose complaint we previously reported on here, alleged that SCJ’s “Greenlist” label is deceptively designed to look like a third party seal of approval, which it is not, and that the label falsely represents that the products are environmentally friendly. The label features a stylized drawing of two leaves and a stem. On the reverse side of the label, which is read through the back of the Windex packaging, the text states: “Greenlist™ is a rating system that promotes the use of environmentally responsible ingredients. For additional information, visit www.scjohnson.com.”

The putative class representative, Wayne Koh, alleged that he and others would not have purchased Greenlist-labeled Windex at its allegedly premium price had he known that Greenlist was actually created by SCJ, not a third party, and that Windex is not environmentally friendly.

SCJ argued that Koh had not alleged a cognizable injury under California’s Unfair Competition Law, Bus. & Prof. Code § 17200 et seq., and that no reasonable consumer could have found the Greenlist label misleading. The court recognized that being induced to purchase a product one would not otherwise have purchased is not loss of money or property within the meaning of Section 17200 as long as one still received the benefit of the bargain. Here, however, the plaintiff argued that he did not receive the benefit of the bargain because he paid more for a product that he believed was environmentally superior to other products. Thus, the court allowed the claim to proceed.

The court also rejected SCJ’s argument that no reasonable consumer could have found the Greenlist label misleading, stating that whether a business practice is deceptive is usually a question of fact that is not appropriate for decision on a motion to dismiss. The facts that the Greenlist label makes no mention of a third party, describes Greenlist as a “rating system” (not a seal of approval), and directs consumers to SCJ’s own website “may weaken the case for deceptiveness,” according to the court, but these facts do not allow the court to rule on the issue as a matter of law.

Finally, the court allowed Koh to include claims arising from a Greenlist label on Shout products even though plaintiff purchased only Windex. The court reasoned that Koh alleged that SCJ used the Greenlist label on multiple products, including one that he purchased, and there is no bright line rule that different product lines cannot be covered by a single class.

So when do we expect the proposed revisions to the FTC’s Green Guides to be announced? If we had a nickel for every time we were asked that question, we would be very green. Our best guess is late spring based on unofficial conversations with FTC Staff. In the meantime, marketers should continue to exercise considerable caution in making broad, general green claims and in using seals or other references to certification as the plaintiffs’ bar is not delaying action pending FTC updates.

- Vicki Shapiro and Amy Mudge