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Going Green Update: The FTC Brings Additional Green Marketing Enforcement Actions

Beveridge & Diamond, P.C., September 2, 2009

Those following the Federal Trade Commission (FTC) in its campaign against unsubstantiated “green” marketing claims have been awaiting concrete action.  Despite hearings in 2008 on updating its “Green Guides”, now over a decade old, the FTC has still not proposed revisions.  Until recently, the FTC had not brought an enforcement action based on environmental claims in almost ten years.  In June, however, the FTC announced three enforcement actions based on “biodegradable” claims.  Then in August, it announced four more enforcement actions, this time against companies claiming to manufacture products in an “environmentally friendly process,” with two of them also making biodegradability claims.  These latest actions signal that the FTC is serious about greenwashing.

Background

The FTC’s Guides for the Use of Environmental Marketing Claims (the “Green Guides”), 16 C.F.R. Part 260, initially issued in 1992, were last updated in 1998.  In 2007 and 2008, the FTC requested comments on the Green Guides and held a series of public meetings to explore possible revisions in light of current “green” claims, such as “carbon neutral,” “sustainable,” and “renewable.”[1]  The FTC’s November 2008 Regulatory Agenda reported that “Staff anticipates forwarding a recommendation to the Commission concerning these Guides in Spring 2009.”[2]  But that plan was changed, because in October 2008 and May 2009 the FTC announced a proposed study of consumer perception of environmental marketing claims.[3]  The May 2009 FTC Regulatory Agenda did not mention updating the Green Guides.  At this point, it is unlikely that the FTC will issue proposed revisions until late this year or in 2010.

On the enforcement side, during the 1990s the FTC brought some 37 enforcement actions based on environmental marketing claims, but the last one was in 2000.[4]  In June 2009, however, the FTC announced three cases based on claims of biodegradability, an issue addressed in the Green Guides.  These cases and related Congressional testimony are discussed in a Beveridge & Diamond client alert, available here.[5]

More FTC Enforcement Actions

In August, the FTC brought four more enforcement actions concerning green marketing claims.  The FTC charged Sami Designs LLC, CSE Inc., Pure Bamboo LLC, and The M Group Inc. with making several false and deceptive environmental claims in violation of Section 5 of the FTC Act.[6]  All four companies advertised that their products were made of bamboo fiber, had antimicrobial properties, and were manufactured using an environmentally-friendly process.  Two of the companies also asserted unqualified biodegradable claims.  The Commission found all of the environmental claims to be false or misleading, and three of the four companies have subsequently entered into proposed settlement agreements.[7]  Litigation continues with The M Group Inc.

Environmental claims have been prevalent in the marketing of textiles.  In response to the fact that “there has been an increase in the use of environmental claims to sell products made from organic cotton and bamboo fiber,” the FTC conducted a public workshop specifically to address this issue in July 2008.[8]  The Federal Register notice announcing the workshop reported:

Certain marketers claim that bamboo is one of the world's most sustainable resources because unlike trees, which can take up to 25 years to mature, bamboo is ready to harvest after four years.  Also, marketers assert that compared with conventional cotton plants, which require large amounts of pesticides and fertilizers, bamboo cultivation requires neither pesticides nor fertilizer...

It is unclear how consumers perceive claims regarding the environmental benefits of textile products, such as organic cotton and bamboo, and the type of substantiation necessary to support such claims.  For example, consumers could believe that claims that textiles made from bamboo are “sustainable,” “renewable,” or “natural” relate both to the material used – bamboo – and the production process.  Substantiating claims that textiles made from bamboo are produced in an environmentally friendly manner may pose challenges for marketers.  Bamboo fibers, which are naturally tough, are often softened through intense chemical treatment prior to weaving.  These chemical treatments may contribute to pollution.  We plan to explore these kinds of issues at the workshop.

Several participants of the FTC’s workshop suggested that rather than assert general claims of “made from bamboo,” more precise claims, such as “rayon from bamboo” should be communicated.[9] 

The FTC appears to agree.  The companies charged in August asserted that their rayon and other textile products were “100% bamboo fiber.”[10]  However, the FTC indicated, “[r]ayon is a man-made fiber created from the cellulose found in plants and trees and processed with a harsh chemical that releases hazardous air pollutants.  Any plant or tree could be used as the cellulose source – including bamboo – but the fiber that is created is rayon.”[11]  Among other requirements, the companies’ proposed settlement agreements require them to “use the recognized generic name of any manufactured fiber” in advertising, and “[r]ayon is the generic name for a type of regenerated, or manufactured, fiber made from cellulose.”[12] 

Businesses marketing products made from cellulose should exercise caution in asserting environmental claims, use precise terminology, and ensure such claims are adequately substantiated.

Dyna-E International Settles “Biodegradable” Action with FTC

On August 26, 2009, the FTC announced that Dyna-E International and the Commission have entered into a proposed settlement agreement which bars Dyna-E from making false or deceptive biodegradability claims.[13]  In June 2009, the FTC charged Dyna-E, along with Kmart Corp. and Tender Corp., with making false or deceptive environmental claims.  While Kmart Corp. and Tender Corp. agreed to settle their administrative cases, at that time, Dyna-E sought to engage in administrative litigation.  With the proposed settlement agreement, litigation would no longer be necessary.

The Dyna-E matter concerns the marketing of Lightload Towels.  The FTC considered Dyna-E’s unqualified biodegradable claims problematic because the product did not “completely decompose into elements found in nature within a reasonably short period of time after customary disposal,” criteria in the Green Guides for biodegradability.[14]  Household waste is generally disposed of in landfills, incinerators, or recycling facilities – none of which are conducive to decomposition.  The complaint also alleged that Dyna-E failed to offer substantiation for the biodegradable claims.[15]  Under the proposed order, Dyna-E is prohibited from making a representation that any product is degradable unless it is true, not misleading, and substantiated.[16]  The proposed order furthermore prohibits Dyna-E from making any other environmental benefit claims about any product, unless they are true, not misleading, and adequately substantiated.  The proposed agreement is currently open for public comment. After thirty days, the FTC will review the agreement in light of the public comments and make a final decision as to its enforcement.

*          *          *

For more information on this topic, please contact Mark Duvall (mnduvall@bdlaw.com) or Rea Harrison (rharrison@bdlaw.com).


[1] See 72 Fed. Reg. 66091 (Nov. 27, 2007); 72 Fed. Reg. 66094 (Nov. 27, 2007); 73 Fed. Reg. 11371 (Mar. 3, 2008); 73 Fed. Reg. 32662 (June 10, 2008).  The comments filed in those hearings are available at http://www.
ftc.gov/bcp/edu/microsites/energy/about_guides.shtml
.

[2] 73 Fed. Reg. 71093, 71297 (Nov. 24, 2008).

[3] 73 Fed. Reg. 60702 (Oct. 14, 2008); 74 Fed. Reg. 22396 (May 12, 2009).

[4] See “The FTC’s Environmental Cases”, http://www.ftc.gov/bcp/edu/
microsites/energy/about_guides.shtml
.

[5] “Going Green:  The FTC Takes Action on Environmental Marketing” (July 1, 2009), available at http://www.bdlaw.com/news-610.html.

[6] See Sami Designs LLC, File No. 082-3194 (Aug. 11, 2009), http://www
.ftc.gov/os/caselist/0823194/index.shtm
, 74 Fed. Reg. 41910 (Aug. 19, 2009); CSE Inc., File No. 082-3181 (Aug. 11, 2009); http://www.ftc.gov/os/
caselist/0823181/index.shtm
, 74 Fed. Reg. 41908 (Aug. 19, 2009);  Pure Bamboo LLC, File No. 082-3193 (Aug. 11, 2009), http://www.ftc.gov/os/
caselist/0823193/index.shtm
, 74 Fed. Reg. 41911 (Aug. 19, 2009); The M Group Inc., File No. 082-3184 (Aug. 11, 2009), http://www.ftc.gov/os/
adjpro/d9340/index.shtm
[hereinafter FTC Bamboo Cases].

[7] FTC Charges Companies with ‘Bamboo-zling’ Consumers with False Product Claims, Aug. 11, 2009, http://www.ftc.gov/opa/2009/08/bamboo.
shtm
.

[8] FTC Announces Workshop on ‘Green Guides’ and Environmental Claims for Buildings and Textiles, June 3, 2008 [hereinafter FTC Workshop], http://www.ftc.gov/opa/2008/06/greenguides.shtm.

[9] FTC Workshop Transcript, http://www.ftc.gov/bcp/workshops/building
andtextiles/transcript.pdf
.

[10] FTC Bamboo Cases, supra note 1.

[11] FTC Charges Companies with ‘Bamboo-zling’ Consumers with False Product Claims, Aug. 11, 2009, http://www.ftc.gov/opa/2009/08/
bamboo.shtm
.

[12] Proposed Consent Order, In the matter of  Sami Designs, LLC, http://www.ftc.gov/os/caselist/0823194/090811samiagree.pdf; Administrative Complaint, In the matter of The M Group, http://www.ftc.gov/
os/adjpro/d9340/090811bamboosacmpt.pdf
.

[13] FTC Settlement Bars Seller’s Deceptive ‘Biodegradable Claims, Aug. 26, 2009, http://www.ftc.gov/opa/2009/08/dyna.shtm.

[14] Administrative Complaint, In the matter of Dyna-E International Inc., May 20, 2009, http://www.ftc.gov/os/adjpro/d9336/090609admincmplt.pdf.

[15] Id.

[16] Proposed Consent Order, In the matter of Dyna-E International Inc., http://www.ftc.gov/os/adjpro/d9336/090826dynagreement.pdf.  74 Fed. Reg. 45204 (Sept. 1, 2009).

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