An overview of recent revisions to ftc green guides
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LOHAS marketers know the value of terms like “biodegradable”, “environmentally-friendly”, and “recycled” – these are the buzz words that communicate the value of our product or service. But, when you use these terms, could you be deceiving your customer? Are you adequately verifying your environmental claims? Your environmental marketing may be falling short based on newly proposed changes to the FTC’s Green Guides. You can’t afford to be complacent about meeting these new guidelines, as the Commission has brought action against companies whose green marketing claims failed their standards, resulting in years of litigation and millions in court fees. Marcos Cordero, CEO of the Green Business Bureau, will lead this highly-informative breakout session where he will cover the proposed changes and offer you tips on how you can make sure that your green claims measure up. A must-attend for LOHAS marketers and business owners.
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An overview of recent revisions to ftc green guides
- 1. You Can’t Say That (Can You?) An Overview of Recent Revisions to the FTC Green Guides
- 2. Formal Complaint Made $40,000 in Legal Fees Still being monitored “My business will never be the same…”
- 3. Up to $16,000 in civil penalties per violation
- 5. “Firm's internal certification process is deceptive, lawsuit says…” “Ongoing two-year civil lawsuit…” Federal case seeks nationwideclass-action status
- 6. "Responsible companies know to pay heed to the FTC Green Guides. Brian Sansoni - Spokesman for the Soap and Detergent Association
- 7. Experience with hundreds of green companies Sustainability Trust Provider Partnerships with Green America and Intuit
- 8. 79% Increase in “green” products Between 2009-2010
- 9. 2% Products that were “greenwashing” free 25 out of 2,219 products examined
- 10. Consumers are becoming more savvy
- 11. 1992 Green Guides Launched Revised 1996, 1998 Current Revisions StrengthenExisting Guides Address New Technologies
- 12. Neither force nor effect of law but Action can be taken under FTC Act
- 13. Green Guides comprised of Four Key Principles Qualifications & Disclosures Distinction of Benefits Overstatement Comparative Claims
- 14. Qualifications & Disclosure Clear, prominent and understandable Plain language, large type Placed close to claim
- 16. Distinction of Benefits Clearly distinguished between products, service and packaging Language that cannot be misinterpreted
- 17. Clearly distinguished between compostable and non-compostable components
- 18. Overstatement Don’t overstate benefits Qualify statements Substantiate claims
- 19. Comparative claims Bathroom tiles 20% greater recycled content – deceptive P. 198 example 4: “environmentally preferable” -deceptive. Needs to be substantiated Comparisons typically are two own previous products OR competitor products Comparative Statements Make basis of comparison clear Specify whether comparing to your previous product or competitor product
- 20. Clear, prominent and understandable Plain language, large type
- 21. 10 Types of Claims Covered by the Green Guides
- 22. How they work together
- 23. General Environmental Benefit “eco-friendly” “green” “sustainable” Consumer confusion Must specifically quality claim
- 24. “eco-friendly” with no qualification
- 25. Carbon Offsets Carbon Offsets Must occur within 2 years Deceptive if required by law Properly quantified by reliable methods
- 27. Certifications and Labels Certifications & Seals Does not eliminate obligation to substantiate claims Label itself must meet FTC guidelines and principles
- 28. Label itself must meet FTC guidelines and principles
- 29. Fully qualified
- 31. Compostable claims Compostable Must compost in reasonable time Qualify claims if it can’t be composted at home Accurately describe benefits of disposal in landfill
- 32. Must decompose within 1 year
- 33. Degradable claims Degradable Must decompose within 1 year Must decompose in customary disposal environment “Degradable” in landfill is deceptive
- 34. “…false and unsubstantiated claims that their American Fare paper products were ‘biodegradable’…”
- 35. Qualified
- 36. Refillable claims Free of / Non-Toxic Must not contain other substances that pose an environmental risk Substance must never have been associated with product
- 37. Recyclable claims Recyclable Must be recyclable in market All components must be equally recyclable Must specify if recycling not available in market
- 38. Must specify if recycling not available in market
- 39. Recycled content claims Recycled Content Must have been “recovered” or “diverted” No requirement to distinguish between pre- and post-consumer Must indicate percentage
- 40. Does not indicate percentage
- 41. Renewable Energy Claims Made with Renewable Energy New Category Deceptive if any part manufactured with fossil fuel-derived power Source should be claimed
- 42. Does not give % power
- 43. Very specific regarding claim: 1/3 renewable energy credits
- 44. Made with Renewable Materials Must be qualified if not: Recycled Recyclable Biodegradable
- 45. Specified Materials
- 46. Ozone safe and ozone-friendly Ozone-Safe / Ozone-Friendly MUST be safe to the ozone layer List of substances governed by EPA
- 47. Your Turn
- 55. Size doesn’t matter. Really. Don’t be stupid. It’s all about the matrix. What will a reasonable (read: squeaky wheel) think?
- 56. For more information or to download this presentation, please visit: www.gbb.org/lohas_ftc
Notes de l'éditeur
- Good afternoon everyone –It’s a pleasure to be here today and cover how LOHAS businesses can be sure that they are marketing their great environmental benefits in a way that is both compliant with the Federal Trade Commission AND recognized by consumers as a product or service with accurate environmental claimsImagine for a second that you are a fairly progressive green company and your products are made from a bamboo derivative, and all of a sudden you get a formal complaint from the FTC
- This is exactly what happened to Mo Saintsing, Bamboosa and 3 other small businesses, that combined didn’t gross even $5M in sales….received a letter formal complaint from the FTC two years agoThey were not clear that their clothing wasn’t officially from bamboo but rather rayon made from bamboo$40K in lawyers’ fees, thousands of additional dollars spent in product labeling, complete website and graphic design revamp, and losing a deal with Whole Foods, his business will never be the same. Customers of 5 years calling them up saying, “we’ve been doing business for 5 years and you’re all a bunch of crooks”Unfortunately in this case, these types of news don’t come off the internet that easily – blemished record
- Btw, under the Act, the FTC can seek civil penalties of up to $16,000 per violation against any company that receives this information but fails to correct its advertising and labeling.
- - Funny enough unlike the Formal Complaint that Bamboosa received, the FTC also sent a warning letter to 78 retailers that they may be breaking the law by selling clothing and other textile products that are labeled and advertised as “bamboo,” but actually are made of manufactured rayon fiber.- A lot of this is about a cautionary tales, and the FTC knows it can get a much quicker win with small businesses who may not have the resources to battle them as the legal department of a Macys or Target- Just goes to show, it’s definitely not just the big companies, in this case it seemed that the FTC wanted to get a guaranteed win
- Another case that is big and is ongoing is against SC JohnsonThey claimed that a Windex product was approved by “GreenList” which btw is trademarked and made it look very official with leaf and branch graphic you would expect- Greenlist is a rating system used to evaluate and reduce environmental effects of chemical ingredients.What the front labels don't say is that the Greenlist insignia is conferred by S.C. Johnson itself. Boom. Don’t do it.http://www.jsonline.com/business/115613414.html
- Brian Sansoni, a spokesman for the Soap and Detergent Association, which represents such companies as Procter & Gamble Co., Church & Dwight Co. and Colgate-Palmolive Co., said, "Responsible companies know to pay heed to the FTC Green Guides.- One important fact to note is that CONSUMERS can actually rat you out and bring the action to the courts requesting that they pursue a company for a deceptive claim….as was in the case with Fiji and their “green dot”, which isn’t mentioned on here, so consumers can also bring it up to the FTC if you think the FTC can’t be everywhere- To paraphrase what Brian Sansoni from the Soap and Detegent Association states, - To paraphrase: Don’t be stupid.
- - My name is Marcos Cordero LEED AP, and I am one of the co-founders and CEO of the GBBAt the GBB we work with over 500 hundred companies in a variety of industries and levels of sustainability. We help companies implement sustainability practices and gain a credible certification for their efforts. We do this with what is an industry leading online software platform and a network of over 650 consultants that validate what members have reported on their sustainability scorecard.We are a fast growing organization and are Sustainability Trust Providers for the likes of ebay, AAA, Travelocity and also are partnered with Green America’s Green Business Network and have recently been selected in a very competitive process as Intuit’s sustainability partnerMy goal today is not to make you aware of the scope of the FTC, an overview of the principles and leave you with an increased sense of awareness and knowledge around environmental marketing, both for your own business and even as a consumer. This is by no means a comprehensive or legal analysis (our lawyers made us say it ;-))BTW, we will be giving out this presentation to anyone interested with the speaker’s notes..As such we are apprised of best practices and environmental standards….and are looking forward to sharing that with you during this session
- - But there is a bright side to all of this, according to Gallup 8 in 10 American customers believe that corporations who promote themselves as env. responsible, are skeptical. And with a 79% increase in “green products” it’s not hard to see whyAccording to Gallup, 8 in 10 Americans (2% strongly disagree, 18% somewhat disagree, 50% agree somewhat, 26% strongly agree) are skeptical of corporations that promote themselves as enviromentally responsible, while 9 in 10 think corporations talk a lot about being environmentally responsible but don’t make any significant changes (2% strongly disagree, 8% somewhat disagree, 43% agree somewhat, 46% strongly agree)2,219 products making green claims in the United States and Canada, only 25 products were found to be Sin-free.79% increase in “green” products between 2009 and 2010 according to TerraChoiceGreenwashing Study (“green” = “products claiming to be green”)
- - 98percent of consumer products examined committed at least one offense of “greenwashing,” a term used to describe unproven environmental claims. This is according to TerraChoiceGreenwashing Report 2010, a North American environmental marketing company that issued the report.2,219 products making green claims in the United States and Canada, only 25 products were found to be Sin-free.In 2009, EnviroMedia researched what motivates people to buy so-called green products and found:About one in three consumers say they don’t know how to tell if green product claims are true.One in 10 consumers blindly trusts green product claims.Consumers are verifying green claims by reading the packaging (24%) and turning to research (going online, reading studies; 17%).
- Some of you may have read the NYTimes article about the sales of green products declining…BUT Method and 7th generation staying strong; customers KNOW!And as the “deep green” demographic continues to grow, compliance will be that much importanthttp://www.treehugger.com/files/2011/04/ny-times-says-green-sales-down-but-misses-real-point.php
- FTC Green Guides first launched in 1992, and were revised in 1996 and 1998; so they haven’t been updated in close to 13 years until last year, actually a year earlier than expectedBased on feedback from consumers, business the Guides have been revised through a series of workshops, customer surveys, and primary research from the FTC around customer perceptionThe basic premise of this guide is one thing: “reasonable consumers are likely to interpret environmental claims, and how marketers can substantiate them to avoid deception”
- The Green Guides They do not have the force and effect of lawThe commission, however, can take action under the FTC Act if a marketer makes an environmental claim that is inconsistent with the Guidesthe commission must prove that the challenged act or practice is unfair or deceptiveWith disastrous consequences as we saw earlier in combination if you’re a small company and have to pay lawyers and stop marketing your main product line in addition to the widespread negative mediaSo let’s get into it
- While the FTC Guides really cover 10 main environmental claim areas, everything from compostable marketing to renewable energy, it all comes back to FOUR main principles that marketers must abide bySo let’s look at the first one
- To prevent deceptive claims, qualifications should be clear, prominent, and understandableMarketers should use PLAIN language and sufficiently large type, place disclosures in close proximity to the claimSo you get a sense for what they mean by “qualified” take for example these two claimsOne doesn’t specify what exactly is “environmentally friendly” about itAnd the other one doesWe’ll see more examples throughout the presentationNEED TO ADD AN EXAMPLE OR TWO HEREWe can even
- Unless it is clear from context, a claim should specify what it refers to (product or packaging or service)ExamplesIn this example we can see that while there is an “unqualified claim” the claim is deceptive if any part of the shower curtain is not recyclableThis soft drink bottle on the other hand, is recyclable and while the cap is NOT, because it is a minor incidental component of the package, the claim is not deceptive. What I find interesting about this example is that unlike some other parts of the Guide, there is not a % of weight indicator that defines “minor” part of the packageNEED A PICTURE OF A BOTTLE OR SHOWER CURTAIN, ETC.
- A marketing claim should not overstate, directly or by implication, the environmental attribute or benefit; basically don’t say the product or service has an environmental benefit that it really doesn’t haveNEED TO ADD THE SPECIFIC CRITERIA AROUND OVERSTATEMENTFor exampleAn area rug is labeled “50% more recycled content than before” Does anyone know how this could be misleading?It takes it from 2% to 3% for example it gives a false impression of a significant improvementA trash bag is labeled “Recyclable” without qualification. Trash bags are not ordinarily separated from other trash or landfill – the bag asserts an environmental benefit where no meaningful benefit in practicality exists
- Comparative claims should be clear to avoid consumer confusion about the comparisonWe’ve all seen this before“20% more recycled content” is misleading because it’s unclear what is being compared to: previous model or competitor productsQuite frankly, if you know these 4 guiding principles then it becomes a lot easier to determine what efforts you’ll need to substantiate your marketing claims, and in some cases, what research you may have to do, especially as it comes to your competitors, for example, because you want to make sure you have the most current information
- - In this case we see a Method bag with very specifically talking about why it’s 83% less than a plastic bottle, and some of the other benefits
- There are 10 types of environmental claims the FTC Green Guides cover, some news ones in this version of the Guides and we’ll cover them all, we may skip a couple depending on time, and we’ll test your knowledge at the end
- there’s a lot of information on this presentation and in the legalese that is any government documentThe ftc has claims, guiding principles, deceptive, etc. But at the end of the day, if you can only remember one thing is how these elements work togetherClearly this matrix has a lot of checkmarks to drive the point home; you have to check off all the columns to be compliant with a claim, in other wordsEvery type of environmental claim has to abide by the four principles – we’ll see this in action
- This is one of the areas that I think gets people into the most trouble and is also one that we see a lot out there. Basically a general environmental benefit claim is one that “eco-friendly”, “green” , “sustainable” These are typically the MOST DIFFICULT claims to make because of the way customers can interpret theseStudies have shown that 61% of customers interpret that it’s made of recycled materials, moreover 27% of respondents believed that unqualified green suggest the product have no environmental impactBecause of this the FTC has said that you must qualify your eco-friendly claim with specificitySo when are you actually in compliance with this claim? If in fact the product has minimal impact to people and the environmentA couple of examplesOne with eco-friendly no qualificationsOne with eco-friendly and qualificationsI THINK HERE WE CAN USE INTERNET SITE OR THE MICROWAVE
- Sellers of carbon offsets need to employ competent and reliable scientific methods to properly quantify claimed emissions reductionsI doubt we have any sellers here today, but if you’re buying carbon offsets then want to be awareIt is deceptive if the carbon reductionHas already occurredWill not occur for 2 years or greaterFor example, an airline carbon offset program that takes 3 years before the development will actually offset carbon – deceptive.
- Third party certifications does not eliminate a marketer’s obligation to ensure that it has substantiation for all claims reasonably communicated by the certificationIt basically comes down to this: you have to evaluate the label on its own using the rest of the FTC guidelines and principles If the criteria are not met, which in many cases they are not given the real esateavilable for seals, the marketer can qualify the seal themselvesThere are six examples on here – the QUESTION is whether we call out specific seals for not being compliant or if we keep it general without naming it?
- Take in this case two different seals. In one it’s actually a propietary seal made to look like a third party certificatioinIn the other while it’s also a seal around sustainability, it’s given a lot of description, i.e. qualification
- - For example this bag of chips that I actually picked up in Boulder a few days ago and their seal only indicates green energy and it is fully qualified with what that means – in this case 100% renewable energy credits
- Compostable has to meet two main claims:1. in a home compost2. at the same time as other items in the compostExamples:Coffee filter is labeled as “Compostable”. If it is in fact substantiated as compostable then NOT deceptiveElectronics makes claim that package is compostable. Although municipal composting facilities exist where the product is sold, the package will not break down in a home compost. To avoid deception the mfg should clearly disclose the package is not suitable for home compost.Nationally marketed lawn leaf bags are compostable but not available to a majority of consumers where the bag is sold. A marketer could state “Appropriate facilities may not exist in your area”A manufacturer markets yard trimming bags only to consumers residing in particular geographic areas served by county, “Compostable Yard Trimming Bags for County Composting Programs”
- The most important things about degradable that you need to know:Ability to degrade in an environment where it is customarily disposedThe rate and extent of degradationExample:Trash bags with a “Degradable” claim. The marketer relies on soil to show the product will decompose in the presence of water and oxygen. Why is that claim deceptive?Shampoo is marked as biodegradable (and only the shampoo) and it’s been shown that it will decompose in a sewage environmentFiber pot is labeled biodegradable. The pot is customarily buried in the soil along with the plant. The pot fully decomposes so that unqualified claim is NOT deceptive
- Another example, In 2009, the FTC took action against Kmart Alleging Deceptive 'Biodegradable' ClaimsCharged with making false and unsubstantiated claims that their American Fare brand disposable plateswere “biodegradable.” In the complaint, the FTC alleged that the defendants’ products typically are disposed in landfills, incinerators, or recycling facilities, where it is impossible for waste to biodegrade within a reasonably short time. 1 year in courthttp://www.ftc.gov/opa/2009/06/kmart.shtm
- - In this image of dr. meyers soap we see a good example of a compliant claim; it is very clear that the product is biodegradable, not the bottle, etc.
- A truthful claim that a product is free of a specific substance can still be deceptive if1. the product contains substances that pose similar environmental risks as the substance that is not present2. the substance has never been associated with the product categoryFor non-toxic claims, because consumers think it means both humans and the environment, from now on non-toxic claims need to be for both, or be qualified otherwise
- If page length is any indication, recyclable claims are probably one of the most abused in the marketplace today and the FTC has a lot of examples for this type of claimSo what are the important things to note here? It boils down to two factors:Can the consumer actually recycle in their area? IN other words, it is the marketers responsibility to know that a substantial portion of consumers can recycle [I wonder here if we have some sort of map with a recycling sign?] I mean this concept has come up a couple of timesIf a component significantly limits the ability to to recycle the product, it is deceptiveExamples:The SPI label is front and center next to the product logo. The conspicous use of the SPI code constitutes a recyclable claim so the substantial majority of consumers must have recycling available (photo of coffee Solo cup from this morning at Salento)A package is labeled “Includes some recyclable material” The package is composed of four layers of material, bonded together. One of the layers is recyclable, but the rest are not. Not many communities can process multi-layer products. This claim is deceptive. An adequate qualification would be more like “Includes material recyclable in the few communities that can process multi-layer products.NEED TO FIND OUT IF IN THE US YOU CAN USE THE SPI LOGO – IE. DOES THE FTC CONSIDER RECYCLING NATIONWIDE IN THE US AS A SUBSTANTIAL AMOUNT?
- As mentioned, the use of the SPI logo, even if correct because it is supposed to direct waste handlers and recyclers how to handle a product, it is also perceived by the public as Made of recycled materialsRecyclableTherefore it should not have prominent area, SPI best practices say it needs to be at the bottom near the center
- Another biggie, recycled content claims, but fairly straightforward actually.Items have to have been “recovered” or “diverted”And something that is interesting is that the Guides do not require is for marketers to distinguish between pre-consumer and post-consumer materialsExamplesA mfg collects spilled raw materials and scraps and produces the same product. A recycled content claim is deceptive since the spills and scraps are normally reused anyway, and were not “diverted” from the waste stream.50% of a greeting card’s weight is composed of paper that was diverted from the solid waste stream. Of this material 30% is post-consumer and 20%. It would NOT be deceptive if the marketer claimed that the card contains “50% recycled fiber”FOR THE SAKE OF TIME I THINK WE ONLY USE A COUPLE OF EXAMPLES FOR THIS ONE (THERE ARE ABOUT 10 IN THE GUIDES) AND THEN WE SAVE SOME FOR THE END.
- There are some close calls but believe it or not this one is Green Mountain Roasters (is that the name?) should we put the front?The FTC Guides require the qualification of the % that the product comes from recycled materials (but not the breakdown)
- This is a new category the FTC is providing guidance onHere again pretty straightforward, marketers should not make unqualified claims if power derived from fossil fuels is used to manufacture any part of the advertised itemMarketers should claim the source of renewable energy (wind or solar, etc.)What counts as renewable energy is everything that is actually renewable or conventional energy offset with renewable energy certificatesExamplesClothing line “Made with Wind Power” and it’s 50%. Deceptive.A retailer places solar panels on its store roof and advertises it’s store as 100% Solar Powered. The company sells the renewable energy certificates based on the renewal attributes of all the power it generates – basically they are transferring the right to characterize electricity as renewable. Claim is deceptive.USE THE PICTURE OF THE 1/3 POWER
- - SO THIS SHOT IS FOR THE RENEWABLE ENERGY SECTION
- So this is actually an interesting claim. So the consumer believes that renewable materials means it’s made with recycled content, recyclable, and biodegradable. So if it’s NOT one of these things, then the renewable material claim needs to be qualified
- THIS ONE GOES INTO RECYCLEDNEED ONE FOR RENEWABLE MATERIALS (http://bambuhome.com/philosophy/why-renewable-materials/)
- This one is probably the most straightforward of all 10 of the claims – basically you can’t misspresent that the product is safe to the ozone layer of the atmosphereThis list is typically governed by the EPA One example mentioned for example is the air conditioner that labels itself as environmentally friendly when in fact it’s only the refrigerant that was replaced
- Deceptive because it doesn’t specify percentageGood qualification that says biodegrades in nature, so the consumer knows whats up
- - Small and out of the way, notdecepitve
- Very clear, recycled %
- NEED TO ZOOM IN ON THIS ONE SO THAT PEOPLE CAN SEE WHAT KIND OF INFORMATION IS ON HEREThis one breaks the general environmental claim and/or the seal claim
- - Very clearly talk about recycling not available
- Officially not deceptiveBut marketers are starting to find ways to meet guidelines, and still use it to their advantage. While this claim is perfectly quatlied, the numerous seals make people believe it’s very user friendly
- - Sustainable Design is a bissell deceptive – have no idea what that means. And then if you go to their site it doesn’t even mention what this seal means. You have to go two pages in to find out that the bottle is 60% recycled.- Seals and standards
- - CLOSING SLIDE