As politicos debate the role of government regulation in this election season, clean technology companies have new reason to take notice. On October 1, 2012, the Federal Trade Commission (“FTC”) released its Guides for the Use of Environmental Market Claims, dubbed the “Green Guides.” The FTC is the federal government’s consumer watchdog organization, and its authority includes bringing companies that violate its directives before an administrative tribunal. The Green Guides help the FTC determine whether green advertising is an unlawful business practice, and thus in practice, they have the force of law.
The Green Guides primarily regulate advertising and claims made on the packaging of consumer commodities. For example, the Guides contemplate the word “recyclable” on a box of aluminum foil as being deceptive, because the packaging does not state whether the box, the foil, or both is recyclable. The Guides make similar edicts about overstatements of green claims and misleading comparative claims, all of which probably give clean tech firms little cause for concern.
But there are other parts of the Green Guides about which manufacturers should take heed. The Guides also regulate claims made about the manufacturing process, perhaps, for example, that a hybrid electric vehicle’s (HEV’s) battery is “manufactured in an environmentally-safe process.” Such a claim is probably far too vague under the Guides, and the manufacturer should be careful to limit the claim to certain “processes” or better define what “environmentally-safe” means.
Likewise, the Guides also purport to regulate suggestive brand names. In the HEV example above, suppose the company decided to remove its environmentally-safe claim in favor of calling its battery “Eco-Ions.” This trademark may also catch the attention of FTC officials, since the name could connote to consumers the idea that the battery has certain environmentally-friendly features, even without an explicit claim to that effect.
The following is a non-exhaustive list of terms that the FTC identified as potentially deceptive:
- Made with __% recycled material
- Environmentally safe/friendly/preferable
So what does this all mean? The crux of the Green Guides is that, when making environmental claims, more information is better, even if these narratives are decidedly less sexy than marketing catchphrases (and probably less effective). But aside from that, companies should not take away from the Green Guides any black and white rules. As with many regulations, context is everything when the FTC determines whether an advertising practice is unfair or deceptive, and it prosecutes potential violations on a case-by-case basis.