Wednesday, September 2, 2009

Green Green

Green Green is the title of a big 1960's hit for The New Christy Minstrels, but the words represent an overwhelming theme for new business in the 21st Century. Consumers are exposed to all sort of green products, from environmentally safe detergents to environmental sensitive buildings. How does the consumer know that a particularly represented "green" product is, in fact, environmentally friendly. Exactly, how green is green?

Enter the Federal Trade Commission. The FTC has published its Guides for the Use of Environmental Marketing Claims. These Green Guides provide safe harbours for marketers who seek confidence that their green marketing claims will not create liability for misrepresentation relating to certain environmental claims.

Sect. 260.5 of the Green Guides makes clear the scope of the FTC's concern relating to deceptive advertising:
In addition, any party making an express or implied claim that presents an objective assertion about the environmental attribute of a product, package or service must, at the time the claim is made, possess and rely upon a reasonable basis substantiating the claim. A reasonable basis consists of competent and reliable evidence. In the context of environmental marketing claims, such substantiation will often require competent and reliable scientific evidence, defined as tests, analyses, research, studies or other evidence based on the expertise of professionals in the relevant area, conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.
In other words, a marketer must have an objective basis to believe that its representations of green qualities for its goods or services are accurate.

Sect. 260.6 sets out basic guidance for marketers relating to environmental claims for goods or services. If there are qualifications or disclosures, then these must be clear and understandable. If a representation is made, then it must be clear whether the representation applies to the packaging of a product, the product itself or an offered service.

Sect. 260.7 makes clear that generalized claims regarding environmental benefits are not acceptable. Further, specific environmental claims or features must be substantiated. "As explained in the Commission's Advertising Substantiation Statement, every express and material implied claim that the general assertion conveys to reasonable consumers about an objective quality, feature or attribute of a product or service must be substantiated."

Sect. 260.7 further sets outs FTC marketing rules relating to use of claims for degradable, biodegradable and photodegradable. There are rules regarding composable and recyclable claims, as well. A marketer is directed to consult the Green Guides, and its own counsel, to determine whether its practices qualify for safe harbour treatment.

By the way, the FTC has maintained enforcement litigation recently against K-Mart, Tender Corporation and Dyna-E International, Inc. for deceptive advertising in relation to environmental claims for their products and/or services. Information about this litigation is available on the FTC website.

A marketer concerned with liability for environmental marketing claims pertaining to its products or services should consult the Green Guides, local consumer protection law and its own legal counsel for complete guidance in this area.

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