FTC Enforcement Trends in Environmental Marketing:
A 30-year review of enforcement actions for food, beverage, and personal-care products
Since 1991, the Federal Trade Commission (“FTC”) has brought about 100 cases against companies for deceptive environmental marketing. The FTC’s enforcement priorities are based on the “Green Guides“, a guidance document originally released in 1992 and subsequently updated in 1996, 1998 and 2012. The next iteration of the Green Guides is currently in the process of being updated.
Although the Green Guides lack the binding force of law, the FTC is empowered under the FTC Act to bring enforcement actions against companies using unfair methods or deceptive acts affecting commerce. While many of the FTC’s enforcement actions are based on the Green Guides, the FTC has also targeted companies for deceptive all-natural claims and organic fraud, which are not currently addressed in the Green Guides but could be in the future.
In this article, we look at past enforcement actions relevant to the food, beverage, and personal care industry. The most common cases in this sector include all natural claims, recyclable claims, and biodegradable claims. Penalties have ranged from cease-and-desist orders to multi-million-dollar fines. You can explore the full FTC database for all environmental marketing enforcement here.
Recyclable Claims:
Under the Green Guides, it is deceptive to misrepresent a product as recyclable. The Guide also suggests that products should not be marketed as recyclable without adequate qualification if a “substantial majority of consumers” (60 percent, according to the FTC) do not have access to the specific type of recycling program required for that product.
In 1994, the FTC brought enforcement actions against Mr. Coffee and fast-food chains America’s Favorite Chicken and White Castle for misrepresenting the recyclability of their paper products.
In the first two cases, White Castle and America’s Favorite Chicken sold food in disposable paper packaging which included a recycling logo and stated “recycled” and “recyclable”. While the packaging was recyclable, the vast majority of consumers did not have access to the proper collection facilities for contaminated paper. Lacking a conspicuous disclaimer indicating that most consumers would not have access to the proper recycling facilities, the marketing was seen as deceptive.
Mr. Coffee was the subject of FTC enforcement for marketing its coffee filters as being “recyclable and made from “recycled paper”. The filters were not actually made from recycled material nor did “the vast majority” of consumers have access to the proper collection facilities for that type of paper. Mr. Coffee was also scrutinized for claiming its filters were chlorine-free and that the new process used to bleach the filter paper “virtually eliminated environmentally harmful byproducts” when these statements were not true. These claims would be classified as “Free-of-Claims” and “General Environmental Claims” under the Green Guides.
Degradable Claims:
Like recyclable claims, a product’s biodegradability should not be overstated or misrepresented. The FTC focuses on the actual conditions required for a product to decompose in addition to the length of time a reasonable consumer would believe it takes for a “biodegradable” product to decompose.
In 1994, the FTC ordered Archer Daniels Midland to cease making claims on marketing materials and in TV ads about the biodegradability of plastic products containing corn starch additives. Although the FTC did not bring any environmental marketing actions between the years 2000 and 2008, there have been several degradable actions in the last ten years.
In 2014, the FTC brought enforcement actions against Farberware EcoFresh and Down to Earth Designs. EcoFresh manufactured food storage containers it advertised as “…made from eco-friendly plastic; safe to recycle & quickly biodegrades in landfills”. Additionally, EcoFresh claimed it had patented a biodegradable additive “EcoPure” which would allow its plastic products to biodegrade in a landfill within 2-10 years. The products did not actually biodegrade as advertised nor did they “completely break down and decompose into elements found in nature within a reasonably short period of time after disposal in a landfill.”
In the latter case, Down to Earth Designs sold diapers and baby wipes it advertised as “100% biodegradable”. The marketing materials claimed “flush, compost, toss, no garbage” and “earth friendly diapers”. The diapers and wipes did not actually biodegrade in a reasonable period of time and the company did not disclose that soiled products would not break down in a home compost pile. The marketing had no disclaimer with this information and the disclaimer included on some of the products was not clear and conspicuous.
All-Natural Claims:
Although all-natural claims are not addressed in the Green Guides, the FTC still considers these claims to fall under the environmental marketing umbrella. In fact, even before the Green Guides was released, the FTC brought action against Perrier in 1991 for deceptive marketing claims which included:
“Unlike many bottled waters that add artificial carbonation, Perrier needs nothing more than this rare gift from nature. In fact, Perrier, just as it bubbles up to the surface, is a perfectly made water. So we don’t tamper”;
“A natural beverage”; and
“Natural filtration”
In truth, Perrier was processed and filtered before being bottled and was subsequently re-carbonated. In 2016, the FTC brought two additional cases against body care companies for deceptive all-natural claims. The first action was against Eden Bodyworks, which sold hair and body products it marketed as all-natural but contained synthetic ingredients such as Polyquaternium-7, Polyquaternium-37 and Phenoxyethanol.
The second action was against California Naturel, which marketed its sunscreen as all-natural and free of “harsh synthetic chemicals”. The sunscreen contained the synthetic ingredient Dimethicone. The FTC was not persuaded that a small disclaimer added to its website indicating that 8% of the product was Dimethicone cured the deception because the disclaimer was not conspicuous.
Miscellaneous Claims:
In 2019, the FTC brought an enforcement action against Truly Organic (now known as Truly), a beauty and body care company which advertised its products as “100% organic, Certified Organic, USDA Organic and vegan”. The products were neither vegan, Certified Organic or contained organic ingredients. The company’s founder “would buy hundreds of gallons of bath, beauty, and home products that he was aware did not contain 100% organic ingredients from online wholesalers with the intention of taking the largely finished products, adding ingredients to increase visual appeal, repackaging, and selling to consumers”. He also falsified an organic certification and utilized the USDA Organic logo on Truly products. In this case, Truly was not only prohibited from making such claims, but also paid a $1.76 million fine.
Take-away:
The distinction between a legitimate environmental benefit claim and greenwashing is not always clear. Under the Green Guides, adding qualifying language and providing additional information when making a green claim is one way to avoid misleading consumers. From the EU’s new Green Claims Directive to the FTC’s review of the 2012 Green Guides, environmental claims are increasingly scrutinized by consumers and regulators alike.
Curious to learn more? Book a consultation with our MarketReady Team today.
