On Monday, the FTC Commissioners issued an opinion and Final Order, finding that ECM BioFilms, Inc. (“ECM”) made false, misleading, and unsubstantiated environmental claims about its chemical additive product.  According to the FTC’s Complaint filed in October 2013, ECM’s advertisements and marketing materials claimed its product would cause plastics using its additive to: (i) biodegrade in a landfill within nine months to five years; and (ii) make the product biodegradable.  The Complaint also alleged that ECM made deceptive establishment claims and that ECM provided the means and instrumentalities to its customers to make deceptive statements to consumers about finished products.  We’ve written previously about similar challenges to biodegradability.  What makes this opinion notable is the disagreement among the Commission about what claims can be inferred from an unqualified claim that a product is biodegradable, the reliability of a relatively new survey methodology, and what the “significant minority” language in the FTC’s Policy Statement on Deception (the “Deception Statement”) means in the context of extrinsic evidence.

In its opinion, the Commission affirmed Chief Administrative Law Judge D. Michael Chappell’s Initial Decision that ECM made deceptive biodegradability claims that plastics treated with its additive will completely biodegrade within nine months to five years and that ECM encouraged its customers to pass on these deceptive claims to consumers.  However, upon its own examination of the evidence, the Commission reversed the ALJ and held that ECM also made implied claims that were false and unsubstantiated regarding how plastics treated with ECM’s product will biodegrade within a reasonably short period of time, or within one to five years by making a general biodegradability claim.  The ALJ had found that the FTC failed to produce sufficient extrinsic evidence that ECM’s marketing made such implied claims.  Continue Reading Consensus Among FTC Commissioners on Green Claims Appears To Be Biodegrading

Earlier this week, the Federal Trade Commission (“FTC”) sent warning letters to 20 manufacturers and marketers of dog waste bags because claims that the bags are “biodegradable,” “compostable,” and other green claims may be deceptive.

As we blogged about in last October, the FTC issued warning letters to companies about their claims that their plastic was biodegradable or “oxodegradable.”  The warning letters involved advertising that products were “biodegradable” when in fact, they would not degrade under normal conditions of disposal in landfills within a “reasonably short period of time,” as required under the Green Guides.  The most recent revisions of the Green Guides had warned that unqualified “biodegradable” claims were deceptive if the items customarily disposed of in landfills would not decompose within one year in such an environment.

Continue Reading Marketers and Sellers of Animal Waste Bags May Be in the Doghouse for Biodegradable and Compostable Claims

Biodegradable_droneRegular readers of our blog know that we try to write about subjects that are very top of mind.  But how to write an advertising blog about surveillance and snooping?  Thankfully the University of Queensland in Australia has provided the answer – biodegradable drones.  A team of researchers there have created two drones – one shaped like a paper airplane and the other like the pod for maple seeds (or a double samara or whirligig, depending upon how scientific you are) – that are made of cellulose and are intended to help monitor the risks of forest fires.  Under the FTC’s Green Guides, products that are labeled “biodegradable” must degrade under conditions of customary disposal within a “reasonably short period of time.” Which begs the question, how are drones customarily disposed of – do they get dumped into some type of landfill or are they scattered over the landscape, either as the result of a malfunction or the actions of some hostile party?  Left out on the ground, cellulose might well degrade in a reasonably short period of time, but the Green Guides take the view that with respect to landfills nothing that is disposed in them will degrade within a reasonably short period of time so that unqualified “biodegradable” claims for such products is misleading.  Perhaps what we need is a landfill drone to observe whether and how long it takes for landfill garbage to degrade.

It’s hard to know where to begin when describing all the claims that were at issue in a recent NAD proceeding involving a challenge by Energizer to claims made by LEI Electronics (“LEI”) for its Eco Alkalines brand batteries.  It’s safe to say, however, that if you’re looking for an easy way to recharge your power over the Federal Trade Commission’s (“FTC”) Green Guide requirements, you could read NAD’s decision in this matter and feel pretty juiced up.

Energizer’s challenge included alleged claims that its competitor’s batteries were eco-responsible; that they were “carbon neutral”; that they were recyclable and made from recycled materials; that they are non-toxic; that they have no environmental impact; and that they are biodegradable. (See what we mean?)  Oh, and there were some actual performance claims thrown into the challenge as well.

Continue Reading NAD Goes Green Just Before St. Patrick’s Day

By cyclonebill (Kaffe) [CC BY-SA 2.0], via Wikimedia Commons
We have sometimes described finding materials that will quickly biodegrade in landfills as the Holy Grail of environmental marketing.  But who would have guessed it would come in the form of a polystyrene cup?

Well, not exactly, the NAD cautioned in a recent decision.  New Win Cup Holdings marketed the Vio cup, which it claimed would – thanks to a special additive — biodegrade 84.37% after 1,154 days in a wetter, biologically active landfill  (wetter, biologically active landfills typically are landfills that are managed to promote the presence of water and oxygen, both of which accelerate biodegradation.)  Further, Win Cup stated that it had used a specific ASTM test, that there was no certainty that the cups would continue to biodegrade further after 1,154 days, and, last of all, that a wetter, biologically active landfill might not exist in your area.  Now that’s what we call a qualified claim!

Continue Reading Not Your Mother’s Red Solo Cup

“Paper or plastic?”  The age-old question, complicated by the creation of biodegradable plastic, has been broken down more.  Many people’s misgivings about using plastic bags were alleviated with the advent of plastic bags that can carry more weight with less guilt.  However, after this week, there is no question that the FTC is serious about deceptive claims surrounding biodegradable products.

On Tuesday, the FTC issued warning letters to fifteen marketers of “oxodegradable” plastic bags.  Oxodegradable plastic is made with an additive intended to cause it to degrade in the presence of oxygen.  The problem, according to the FTC, is that oxodegradable products will biodegrade, but not in landfills, where there may not be enough oxygen for the oxodegradable bags to degrade in the time expected.  Under the FTC’s Green Guides, products that are labeled “biodegradable” must degrade under conditions of customary disposal within a “reasonably short period of time.” The 2012 revisions to the Green Guides specifically cautioned that unqualified “degradable” or “biodegradable” claims for items customarily disposed of in landfills, incinerators, and recycling facilities are deceptive, because the locations do not present conditions in which complete decomposition would occur within one year.

This isn’t the first time the FTC has addressed the issue, and if the past is any indicator, it probably won’t be the last.  The warning letters follow five enforcement actions involving plastic biodegradability claims that the Commission brought last year.  The enforcement actions were brought as part of a program to ensure compliance with the agency’s Green Guides, and, given this week’s warning letters, it appears the FTC may have more targets in sight.

The companies who received warning letters must either stop making the oxodegradable claims, or produce reliable scientific evidence that their claims – unlike their bags – will not erode.  The Commission also warned that companies who did not receive warning letters should not assume that the FTC has given them the green light, and their claims might be subject to scrutiny in the future.

As we have said before, “Green Claims” – and particularly claims about biodegradable products – are a priority for the FTC.  The FTC has shown that it will continue to aggressively enforce its Green Guides and pursue claims with the violating companies.  As more “green” products enter the market, companies advertising and marketing products with recycled content should carefully review the FTC’s “Green Guides.”  Otherwise, your claims might disintegrate.

In its most recent effort to police the accuracy of environmental claims, the FTC took action against Down to Earth Designs, Inc. marketers of gDiapers, a product that consists of a reusable outer “pant” and removable inserts.  The agency alleges that the company ran afoul of the requirements for environmental claims laid out in the FTC’s “Green Guides” by making unqualified claims that the gDiaper inserts and wipes are plastic free, compostable, and biodegradable when flushed or thrown out.

The complaint alleges that the unqualified biodegradable claims are misleading because the majority of the inserts will eventually end up in a landfill, either because users throw them in the trash or flush them, where they are subsequently filtered out of the water as part of the treatment process and sent to a landfill.  The FTC takes the position that once in a landfill, it is impossible for a material to degrade within a reasonably short period of time. All regrettable diaper puns aside, there are lessons to be learned from this, and other recent green claim enforcement actions, for companies that wish to avoid getting in deep… trouble.   Continue Reading FTC Finds Green Diaper Claims Full of …Leaks

graduate-plastics_smTo paraphrase Mr. McGuire in The Graduate, “There’s a great future in plastics. Think about it. Will you think about it?”  Well, the FTC clearly has taken that advice and has been thinking about the future of plastics in landfills.  When the FTC announced its revised Green Guides slightly more than a year ago they amended their guidance on biodegradability to make clear that unqualified biodegradability claims cannot be made for products that are customarily disposed of in landfills.  In doing so, the FTC rejected comments that suggested it adopt a scientific protocol safe harbor for biodegradability claims because it felt that no such protocol exists that adequately replicates real world landfill conditions.

Well the FTC made it clear this week that they meant what they said.  The Commission announced five enforcement actions involving plastic biodegradability claims and another case involving a more general biodegradability claim.  This confirms what we’ve been telling people – biodegradability claims are the most common type of environmental cases brought by the agency and after yesterday there isn’t even a close runner- up. Continue Reading We Have One Word for You: Plastics.

The FTC announced earlier this week that it had sent copies of a warning letter to certain members of the travel industry alerting them to the FTC’s position that any price advertising should clearly and prominently include all mandatory charges.  Yesterday the FTC announced sending warning letters to makers of sports equipment over health claims in connection with announcing a final settlement with a mouth guard marketer as to reduced concussions claims.

While any letter from the FTC deserves serious scrutiny, there is one type of letter, not used here, that should be especially alarming.  Under Section 5(m)(1)(B) of the FTC Act, if the Commission enters a final cease and desist order (other than a consent order) with respect to an act or practice then it may seek civil penalties against any company that engages in such act or practice with actual knowledge that it is unlawful.

Pursuant to this provision the FTC sometimes sends out warning letters to companies citing such final cease and desist orders entered against other companies and setting the recipients up potentially for a subsequent civil penalty action.  The question, however, is how closely must the acts or practices in the cease and desist order match the acts and practices that form the basis for the civil penalty action.  For example, if the FTC enters a final cease and desist order against a company for a biodegradable claim, can it send out a letter citing the case warning other companies not to make misleading environmental claims or is the fit more narrow (or even potentially broader) than that?

We are aware of at least one circuit court decision on this question.  In that case the FTC sought civil penalties against an automobile dealer for failing to adequately disclose credit terms.  However, the court found that only one of the cases cited by the FTC in its notice involved a deceptive act or practice and that this one case did not concern an automobile dealer and related to a bait and switch and not disclosure of credit terms.  Thus, the court found that the FTC had not established the necessary basis for seeking civil penalties.  However, while it’s clear that the 8th Circuit wasn’t prepared to write the FTC a blank check in terms of how closely the cease and desist order must match the practice of the party under notice, the case does little to shed light on how closely the two must align.

KermitIt just got a little easier being green.  Yesterday, the FTC announced the final version of its revised Green Guides.  And as one might expect, the FTC did not just recycle its prior draft but made some important revisions, based in part upon many of the approximately 340 unique comments it received.

Jim Kohm, Enforcement Division Director from the FTC’s Bureau of Consumer Protection, unveiled the draft revised Green Guides two years ago at the NAD conference and had the honor of unveiling the final guides at this year’s NAD conference.  We’ll blog later in more detail on some of the issues presented by the new Guides, but some of the key takeaways from Mr. Kohm’s presentation are set out below.

  • The FTC is not looking to play “gotcha” with the guides for companies that are legitimately trying to advertise in good faith and stay on the right side of the line.  If you inadvertently step over the line they will try to work with you to bring you back over.
  • The FTC does not set environmental policy and their purpose is not to promote or denigrate green claims.  Instead, their goal is to avoid having the field polluted by deception and to avert the possibility that consumers may stop listening to all green claims because of deception.

So what are some of the key differences between the draft guidelines and the final guides?    We summarize a few important ones below.

General environmental claims – If you advertise that your product has an overall benefit to the environment because of a specific attribute (e.g. you’ve switched from one type of material to another) you should analyze any trade-offs that resulted from the switch to make sure that there is an overall benefit.  Whether you need to do a more extensive lifecycle analysis depends in part upon the nature of the claim and the trade-off.

Carbon Offsets – No real changes here but Mr. Kohm emphasized that the FTC only addressed regulatory additionality (whether you were required by law or regulation to take an action) because there is still a great deal of discussion and disagreement within the environmental community about other types of additionality.

Seals and Certificates of Approval – The final guides clarify when you have to disclose a material connection to the certifying organization, particularly with regard to trade associations that certify members’ environmental claims.  If the trade association standards were developed and maintained by a voluntary consensus standard body and applied by an independent auditor then there is no disclosure requirement, as the standards are not “biased” and consumers are presumed to assume that the certification was “paid for” whether through trade association membership or by direct payment to a third party certifying organization.

The requirement that you qualify any claim that a green seal implies, such as general environmental superiority or ‘no impact on the environment,’ continues.  This qualification should be part of the seal itself or be in a disclosure that is in close proximity to the seal (i.e. no reference to online disclosures for claims that appear in brick and mortar stores.)  Of course, there’s an exception to every rule, or “guide” in this case.  If you are using a seal that evaluates products on attributes that are too numerous to readily enumerate the final guides say you can comply with the disclosure requirement by including the disclaimer: “Virtually all products impact the environment.  For details on which attributes we evaluated go to www._________”.

Compostable and Biodegradable – There is not much change here.  Mr. Kohm did address some of the new plastics that breakdown more readily.  With regard to compostability, if a product using new plastic technology will compost only in very specific commercial facilities that are not readily available to most consumers then this must be disclosed.  With regard to biodegradability in landfills, he cautioned against relying on ASTM standards that may suggest that such plastic products will biodegrade.  Such standards, he said, do not generally reflect typical landfill conditions.  (Some landfills are becoming more “aerobic” and thus conducive to biodegrading but are also not readily accessible to most consumers and so a disclaimer would be in order.)

“Free Of” claims – “De minimis” has been replaced by “trace amount”  So if a product contains only a trace amount of a substance, this trace amount does not cause the harm typically associated with that substance and you didn’t add it intentionally to the product you can say “free of.”  Except that it may be misleading to say that your product is “free of” a substance that has never been associated with that product category (it’s okay if your product never had it as long as other products in the category did.)

Nontoxic  – Pets are people too or maybe just part of the environment.  In either case the FTC has clarified that general nontoxic claims also apply to our various four-legged, winged and finned friends.

Recyclable – The final guides modified the proposed three-step analysis for what type of recyclable claim you can make.  A claim of recyclable should be qualified when facilities are not available to at least 60% of the consumers or communities where the product is sold.  After that the former strict percentage tests have been abandoned for a sliding scale.  If facilities are available to only a few consumers the qualifying language should state that the product is recyclable in only a few communities.  If it is somewhere in between, then you can use the qualifier that “this product may be recyclable in your area.”

Claims That Were Not Addressed – The final guides, like the draft, do not address the use of “natural” or “sustainable.”  However, the FTC cautioned at a press conference yesterday that this does not mean that they would not bring an enforcement action based upon the use of those claims in an appropriate case.

The Future – The FTC is unlikely to do a complete review of the revised guides for another ten years.  However, they could potentially make minor modifications, particularly if they obtain suitable information to help them provide guidance in certain areas.  Mr. Kohm mentioned three such potential areas where the Commission would welcome additonal information: how to define recycled content with respect to preconsumer content, other types of additionality for offset claims and the use of sustainable as a “green claim.”