April/May 2010 / Cover Story
What Companies Should Know About the FTC’s Green Guides
Claims that products are environmentally-friendly or “green” have become common, and many are suspect. At best people often are confused by the terminology. In many cases the terminology is purposely vague or misleading.
Regulation of environmental marketing falls under the Lanham Act, which prohibits misrepresentation in advertising, and the FTC Act, which prohibits unfair or deceptive practices and unfair competition. Actions may also be brought by state attorneys general, and individual and class action lawsuits may be filed under state deceptive practices laws. In addition, competitors can file complaints with the National Advertising Division of the Better Business Bureau.
To avoid problems, marketers should pay attention to the Federal Trade Commission “Green Guides,” issued in 1992 and currently being revised. The Guides advised marketers to to qualify their environmental claims where warranted, avoid exaggeration and be clear when making product comparisons. An FTC official recently warned specifically against poorly substantiated “life-cycle” claims.
Making unjustified environmental claims, or “greenwashing,” the author warns, can create major problems for both companies and individual executives. FTC enforcement mechanisms include cease-and-desist orders, which can embody broad prohibitions, lasting up to 20 years, and embrace company subsidiaries. Conditions put on individuals by consent orders can follow them if they move to another company.
