If you are a business owner or marketer in the footwear and apparel industry, the Federal Trade Commission’s (“FTC”) recently revised “Green Guide” will affect your business. In today’s marketplace, most businesses are cognizant of the fact that consumers are increasingly concerned about the environmental impact a product or service has and will make purchasing decisions based on certain environmental impacting concerns. The revised “Green Guide” is the FTC’s attempt at regulating marketing claims on a product, package or service (which includes environmental claims in labeling, advertising, promotional materials and all other forms of advertising) in an attempt to thwart unfair or deceptive environmental claims made by organizations. To comply, organizations must ensure that all reasonable interpretations of their environmental claims are truthful, not misleading and supported by a reasonable basis before the claims are made.
Who is Effected?
Essentially, every business that makes any claim or impression of its product or service having a beneficial environmental impact is subject to these new guidelines. Even if your business sells exclusively to other businesses, your environmental claims will be scrutinized by the FTC.
What is an Unfair or Deceptive Environmental Claim?
When the FTC reviews an environmental claim to determine whether the claim is deceptive, it looks to the “net impression” the claim presents. Organizations must ensure that all reasonable interpretations of their claims are truthful, not misleading, and supported by a reasonable basis before they make the claims.
The Five Most Common Environmental Claims Traps for Footwear and Apparel Businesses
(i) Not Specifying What the Claim Refers To – unless it is absolutely clear, an environmental claim should specify whether the claim refers to the product, the product’s packaging or service. For example, if a product’s packing contains the recycling symbol alone, the organization must make sure that the packaging and the product itself is 100% recyclable. If the recycling symbol only referred to the product’s packaging and this fact is not specified, it would be considered a violation under the FTC’s new guidelines. If the recycling symbol had been qualified with a statement such as “Packaging is 100% recyclable”, it would not be deemed deceptive (assuming that the packaging is 100% recyclable).
(ii) Overstating Environmental Benefits – an environmental claim should never overstate the environmental benefits the product has. For example, if a claim is made that a product is produced using 50% less plastic, but uses an alternative component that is equally or more harmful to the environment than plastic, this claim would be considered deceptive.
(iii) Comparative Claims – when comparing your product or product packaging to another company’s product or your own organization’s predecessor product, the environmental claim must specifically state the comparison. An example of a violating environmental claim is one that only states “40% More Recycled Content”. A non-violating claim would be one that states “40% More Recycled Content Than Our Previous Products”.
(iv) Product Names/Logos – even if no particular “claim” is made, the FTC will consider it a violation if a product or company name has the “net impression” of having an environmental benefit when it does not. For example, a company or product by the name of “Earth Friendly” would probably be in violation, according to the FTC, if the product or services offered by the company were not, in some way, beneficial to the environment. Similarly, a logo for a company or product that gives the impression of an environmentally friendly product would be under the same scrutiny.
(v) Environmental Endorsements and Certifications – many organizations will use a certifications or seals to promote their environmental superiority. The FTC will consider it a violation if the certification or seal is not legitimate or is false as to its environmental benefit for one reason or another.
Keys to Avoiding Misrepresented Environmental Claims
(i) Substantiate All Claims – the most important thing an organization can do is to maintain a record that will substantiate any environmental claims made. The substantiating documentation must be considered “competent and reliable scientific evidence” of the claim.
(ii) Assume the Claim is Being Interpreted by a 5 Year Old – as discussed above, the claims are subject to all reasonable interpretations as to whether they are deceptive or not. When making or reviewing an environmental claim, you must keep this in mind and assume that consumers with less than average intelligence are going to read it and you have to read the claim and interpret it as those people would.
(iii) Be Conscious of What Constitutes a Claim – even if you are not making a specific environmental claim, you must understand that any inference to the environment, whether it be a name or logo, could be considered an environmental claim and subject to the FTC’s scrutiny.
When dealing with environmental claim issues, the most difficult thing to overcome is the lack of common sense associated with FTC’s rules. It is frustrating for myself, as well as my clients. Unfortunately, the term “common sense” did not make it to the revised Green Guide and it is something that we are stuck with. While it is understandable to have certain guidelines to protect consumers, I believe accounting for all reasonable interpretations of a claim is truly unreasonable and an overreaching burden on our businesses by our government. That being said, there are ways to structure your environmental claims so that you can avoid our government’s reprimand. Prior to finalizing your product, labels, packing or advertising materials, you should have your legal counsel review any potential environmental claims to ensure the claim would not be deceptive or misleading in the eyes of the FTC.
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