Three weeks ago the Federal Trade Commission sent warning letters to 5 providers of environmental certification seals and 32 businesses using those green seals, alerting them to the Agency’s concerns that the seals could be considered deceptive in violation of federal law.
The FTC enforces the Federal Trade Commission Act, 15 U.S.C. § 45, which prohibits deceptive advertising. In 2012, the FTC issued updated Green Guides for the Use of Environmental Marketing Claims, 16 C.F.R. Part 260. The Green Guides provide businesses with detailed information about how to make non-deceptive environmental marketing claims, including through environmental certifications and seals of approval.
The Green Guides caution that unqualified general environmental benefit claims likely convey a wide range of meanings, including that a product has specific and far-reaching environmental benefits and that an item has no negative environmental impact. Section 260.4(b). The Guides go on to say, “because it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims, marketers should not make unqualified general environmental benefit claims.”
To that end, the Green Guides state that environmental certifications or seals of approval may imply a general environmental benefit claim. Specifically, the “use of an environmental certification or seal of approval likely conveys that the product offers a general environmental benefit if the certification or seal does not convey the basis for the certification or seal .. ” Section 260.6(d).
The Green Guides advise that marketers may prevent deception by accompanying the seal with “clear and prominent qualifying language that clearly conveys that the certification or seal refers only to specific and limited benefits.” Section 260.6(e).
Moreover, the Green Guides offer several examples, including,
Example 5: A marketer’s industry sales brochure for overhead lighting features a seal with the text “EcoFriendly Building Association” to show that the marketer is a member of that organization. Although the lighting manufacturer is, in fact, a member, this association has not evaluated the environmental attributes of the marketer’s product. This advertisement would be deceptive … The use of the seal would not be deceptive if the manufacturer accompanies it with clear and prominent qualifying language: (1) indicating that the seal refers to the company’s membership only and that the association did not evaluate the product’s environmental attributes; and (2) limiting the general environmental benefit representations, both express and implied, to the particular product attributes for which the marketer has substantiation. For example, the marketer could state: “Although we are a member of the EcoFriendly Building Association, it has not evaluated this product. Our lighting is made from 100 percent recycled metal and uses energy efficient LED technology.”
The FTC’s new business blog post, Performing Seals, further articulates how certification seals and logos can comply with the Green Guides. It includes two sample certification seals (see above) to illustrate dos and don’ts.
I have written a series of blog posts about FTC enforcement actions in this area, including Do Not Sell the RECs and Claim the Building Uses Renewable Energy.
At this time, no law enforcement actions are being taken, and the FTC is not disclosing the names of the companies it sent the letters.
In response to a request for comment, the owner of one of the most widely recognized environmental certification seals, who was not a recipient of one of the FTC letters, said,
The U.S. Green Building Council supports the FTC’s efforts to ensure that green certification seals accurately convey information to consumers, and not make claims that could be misleading. …
Third party certification is important here because it holds businesses accountable for what they say is true, and it signals to consumers that the certified item meets certain standards so that they can make educated decisions about what to buy. Third-party seals of approval can communicate other things as well, such as the values of the company or the class of the product. At USGBC of course, we stand for accountability, and we translate that accountability through the LEED third-party certification process.
The immediate practical impact of announcing the letters have been sent has been broad and swift with many businesses evaluating seals and logos on their websites and marketing materials, many of which connote membership in an environmental organization.
This law firm regularly assists businesses with green claims that can be made with certainty. If you have questions do not hesitate to contact Stuart Kaplow.