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FTC To Regulate Greenwashing
Volume 740
August 24, 2010

In an effort to protect consumers from exaggerated advertising claims, the Federal Trade Commission (FTC) is considering tight regulations on how marketers use words like “recyclable,” biodegradable” and “carbon neutral.” The rules, also known as Green Guides, could affect more than 300 environmental seals of approval on current products, possibly making those environmentally-friendly claims in violation of government standards. Besides updating those standards, the rules would also more clearly define how companies can back up their claims of environmental sustainability.

The updated regulations will continue a recent trend of more aggressive enforcement of eco-friendly-related advertising. During the past two years, the FTC has brought seven environmental advertising enforcement actions, compared to zero during the prior eight years. While the FTC cannot compel companies into adopting more eco-conscious policies, the agency is permitted by law to stop marketing fraud.

The FTC is specifically targeting greenwashing, the practice of making an unsubstantiated or misleading claim about the environmental benefits of a product in order to increase its sales. The most notable case of alleged greenwashing occurred last year when the FTC accused Kmart of listing paper plates as biodegradable. The plates, the government argued, would not typically decompose in solid waste facilities where most garbage is found. Kmart eventually agreed to alter its “biodegradable” claims in its marketing.

Before the FTC begins enforcing the new rules, the agency will first publish the Green Guides in the Federal Register and institute a comment period. The FTC is expected to announce the updated regulations within the next two weeks, likely issuing the most substantial change to Green Guides in more than a decade.

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