February 14, 2011

Upcoming Federal Trade Commission Revised “Green Guides”

Posted on February 14, 2011 by Joseph Manko

The Federal Trade Commission (FTC) Act prohibits “unfair and deceptive acts or practices.” 15 U.S.C. § 45. In 16 CFR § 260.2, unfair and deceptive acts or practices are defined as being a representation, omission or practice that (1) is likely to mislead consumers acting reasonably under the circumstances and (2) is material to a consumer’s decision. In essence, the FTC evaluates marketing from the consumers’ perspective and in the words of its Chairman Jon Leibowitz: “What companies think green claims mean and what consumers really understand are sometimes two different things.”

In the environmental area such claims can attach to a product, package or service in its labeling, advertising, promotional materials or other forms of marketing or sales paraphernalia, in any medium, expressed or implied, and including words, symbols, logos, depictions, brand names, etc. To avoid being deceptive, there has to be a reasonable basis to substantiate a claim which often requires competent, reliable scientific evidence, often based on tests, analyses, research or studies.

The original Green Guides were issued in 1992, and were amended in 1996 and 1998. The FTC began its current review of the Guides in 2007, proposed revisions in October 2010 and closed the public comment period on December 10, 2010.

Although the proposed Green Guides are voluminous and people should refer to the proposal in the October 15 Federal Register, suffice to say that they now intend to cover not only the products and services within a building, but the proposed Guides, if adopted in their current form, would be interpreted to apply to buildings themselves, which was contrary to the former belief that product liability did not attach to buildings. According, in addition to concern for environmental disclosures, regulated by the Securities Exchange Commission, the FTC would now constitute a second regulatory review agency. 

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