FTC Imposes Harsh Penalties on Deceptive ‘Green’ Marketing

“If there’s an area that’s clearly unfair, deceptive in all cases, and it’s prevalent in the market, you probably want to have that power,” said Laura Koss, assistant director of FTC enforcement. I think so,” he said.

The FTC is also seeking comment on whether information should be provided on 19 environmental terms, including “sustainable,” “carbon neutral,” “low carbon,” “carbon negative,” and “net zero.” increase.

“For the average consumer, these claims are impossible to verify,” FTC Chairman Lina Khan said in a December statement announcing the launch of the review. “People who want to buy eco-friendly products should usually trust what is written on the box.”

Launched in 1992 and last updated in 2012, the agency’s so-called Green Guide outlines the principles that apply to environmental marketing claims. They said companies should be able to articulate general environmental claims such as “green” and “environmentally friendly” and have evidence as to why their products are beneficial to the environment. I’m here.

The FTC has filed federal lawsuits against companies that make deceptive environmental claims, and the guide is cited in marketing laws in California and other states. In a recent FTC case, Kohl’s Ltd.

and walmart Ltd.

In 2022, dozens of rayon textiles have reached settlements of $2.5 million and $3 million, respectively, claiming they are made of bamboo.

“We are committed to enhancing our product description program and expect our suppliers to provide products that comply with all laws, including labeling laws,” a Walmart spokesperson said.

A Coles spokesperson said the company has “learned from this experience” and is working with vendors to “adjust labeling to help individuals make accurate and informed decisions.”

Companies are increasingly touting the environmental benefits of their goods and services. According to NielsenIQ, sales of consumer goods in North America with labels promoting sustainability increased from $248.1 billion in 2021 to an estimated $268.9 billion in 2022.

new language

It took over two years to revamp the Green Guide last time. FTC staff will review the comments and make recommendations to the Commission. The Commission may decide to open a separate public comment period to notify votes on changes.

The range of terms being considered reflects the significant evolution of green marketing over the past decade, and businesses need clearer guidance, says Advising Businesses on Green Marketing and Representing Businesses at the FTC. said Caiti Zeytoonian, attorney at Morgan, Lewis & Bockius LLP.

“It’s like driving down the road with a map from 10 years ago, the roads have changed and the streets have changed. I just hope we’re on the right track,” she said. Told.

Tomas Gonsorcik, chief strategy officer at marketing firm DDB North America and co-chair of the American Association of Advertising Agencies, says marketers and their clients are more confident in communicating their environmental commitments. It said it should welcome more detailed revisions to its guidelines and regulations to help Strategy Committee.

“Given the amount of green, rainbow and wakewashing in the industry and the recent accusations against all of them, brands looking to the future and looking to drive sustainable growth in their business should make these claims a reality. I believe there is a need,” he said. “I think regulation should complement that.”

The FTC did not change its legal underpinnings in its latest guidelines on advertising health products, released in December. However, the guidelines have certainly expanded the range of products to which they apply, experts say, requiring more concrete evidence for claims.

fine factor

A 2021 Supreme Court ruling significantly limited the FTC’s ability to bring monetary damages lawsuits in federal court on behalf of consumers, attorneys said. Chong Park, a partner at law firm Ropes & Gray LLP and a former FTC attorney, said the FTC is now considering the possibility of creating a rule that would cover environmental marketing claims and give it the ability to impose civil penalties. This decision may be the reason.

Park said these rules could result in civil penalties of about $46,500 per violation.

Koss declined to say whether the Supreme Court ruling prompted the FTC to consider new rules on green marketing. However, the agency said in October that the decision “impeded the FTC’s ability to seek financial relief for consumers.” We were considering creating rules to combat fake reviews and other deceptive endorsements.

Koss said the FTC is asking if there are parts of the Green Guide that should be made into rules instead of codifying entire documents. She declined to say which parts were of particular concern.

“There may be certain areas,” she said. “I haven’t seen it yet.”

Please contact Dieter Holger (dieter.holger@wsj.com).