It’s hard to believe, but then again it’s not – the Federal Trade Commission has challenged a company that was selling a scam environmental certification.  Not surprisingly, the agency filed a press release last month announcing that FTC is prosecuting the marketers of the “Tested Green” environmental certification program, seeking to bar the company and its founder from engaging in this type of deception.  The agency also seeks a twenty year compliance order, to supervise the individuals responsible for “Tested Green.”

According to the FTC’s complaint in the matter, Tested Green certification was sold at two price levels, for $189.95 for a “Rapid” certification and $549.95 for the “Pro-Certify” Tested Green certification.  However, the only real requirement to obtain the certification was a willingness to pay for it.  In exchange, Tested Green would provide logos and a link to a Tested Green web page that would “verify” certification.  As the FTC press release quipped, Tested Green certifications “were neither tested nor green.” 

Apparently, the FTC has found that 129 customers were duped by (or perhaps complicit with) the bogus Tested Green certification program.  If consumers or competitors of these customers were potentially harmed or mislead by such certifications, don’t be surprised to see additional fallout from this investigation. 

The problem of false certifications is certainly not limited to “Tested Green.”  In the 2010 Greenwashing Report, the marketing firm TerraChoice notes that this is one of the bigger problems with environmental marketing claims, finding that over 30% of the 4,744 products examined for the 2010 Report advertised false certifications.  If that is true, the FTC’s enforcement action against Tested Green isn’t exactly a clean-up in the industry. 

To be fair, the FTC’s new proposed Green Guides do attempt to address this problem directly, noting that bogus certifications will be prosecuted.  Still, given the modest number of green marketing enforcement actions in recent years, it is hard to imagine that FTC will launch a major offensive against false certifications.  On the other hand, a few FTC prosecutions, the TerraChoice Greenwashing Report, and other means of enforcement available to consumers and competing companies, should serve as warning to would-be false certifiers and those who would purchase their bogus certifications.  The market is wise to this type of cynical green marekting strategy.

Joseph ("Jay") Eckhardt is an attorney, and the editor of the FTC Green Guides Resource Page at the law firm Stoel Rives LLP, based in Portland, Oregon. 

The rising tide against greenwashing may have swamped the Fiji Water Company.  The issue is carbon offsets.  Is Fiji Water truly “carbon negative” as the company has advertised?  A lawsuit filed last month by the Newport Trial Group, a law firm representing California consumers, argues that it isn’t.  The problem isn’t that Fiji hasn’t tried to account for and offset carbon emissions.  The problem, according to the consumers’ complaint, is that Fiji relies on carbon offsets that are premised on speculative offsets that “may or may not happen in the future.”  Once again, the market is looking closer at green marketing claims – and class action plaintiffs’ attorneys are striking out against vague claims.   Whether Fiji Water has actually deceived consumers with its ecofriendly claims is yet to be determined. 

Certainly, the Fiji Water case isn’t the first consumer class action that alleges deception in the context of greenwashing, but it is another indicator that green marketing can be risky.  And while there has been significant attention to the Federal Trade Commission’s release of new Green Guides for environmental marketing in recent months, the Fiji Water case also serves as a reminder that the FTC isn’t the only stakeholder empowered to challenge environmental marketing claims. 

What did Fiji Water do to provoke this challenge?  According to the complaint, the key issue is that carbon offsets purchased by Fiji rely on something called “forward crediting,” a method of providing carbon offset credits based on future offsetting activities.  The complaint alleges that forward crediting has been discredited by the Stockholm Environment Institute.

The fact that Fiji Water went beyond merely trying to offset its carbon emissions, and claimed that its products are “carbon negative” based on the purchase of carbon offsets equal to 120% of its carbon emissions is also very relevant.  This may be  a case of “no good deed goes unpunished” – if Fiji in fact did purchase bona fide carbon offsets that will materialize in the future.  On the other hand, if the facts show that Fiji purchased speculative or poorly administrated carbon offset credits, expect the California consumers to demand a big settlement.  (The complaint argues that Fiji Water’s “carbon negative” advertising helps the company charge super-premium prices.)

An interesting aspect of the complaint is that while it does not reference the FTC’s new Green Guides, the consumer challenge against forward crediting tracks with the FTC’s thinking.  The proposed new Guides advise that  “marketers should clearly and prominently disclose if [their] carbon offset represents emission reductions that will not occur for two years or longer.”  The Green Guides are not California law of course, but California’s consumer protection statute does actually make reference to the Green Guides and provides a legal defense for companies that can show their marketing claims are consistent with the Guides.  

Regardless of where the Fiji case actually goes, it teaches a couple important lessons to all marketers.  First, remember that the FTC isn’t the only “enforcer” empowered to challenge a green marketing strategy.  Bogus, vague, or speculative claims may be challenged by class action attorneys under state laws, especially in big states like California.  Second, the guiding principle for green marketing claims has to be complete disclosure.  A company can merely claim that it purchases carbon offsets, but that claim is risky without further disclosure of the fine print.

Guest Blogger Joseph ("Jay") Eckhardt is an attorney at Stoel Rives LLP, based in Portland, Oregon.  

After almost three years of consultation and planning, and following a great deal of anticipation in recent months, the Federal Trade Commission has finally published “Proposed, Revised Green Guides.”  This latest version of the Green Guides will be open for public comment until December 10, 2010.  After that, according to an FTC press release, the agency will issue a final, official version of the Guides. 

It’s a sad truth, but consumers and regulators view environmental marketing claims with increasing skepticism.  While many companies make fair claims about the environmental attributes of their products, others are exploiting consumer demand for sustainable products with false or unsubstantiated marketing claims.  Thanks to such tactics, the term “greenwashing” has entered the marketing lexicon.  The environmental marketing firm TerraChoice brilliantly describes and defines greenwashing in its 2009 Greenwashing Report, and concludes that many, if not most, environmental marketing claims are unfounded. 

In this climate, it’s no surprise that the FTC is stepping up efforts to combat greenwashing.  A key step in this new enforcement effort is to provide more guidance on environmental marketing claims through the Green Guides.  The Guides (last updated in 1998) provide non-binding “interpretations” of federal consumer protection regulations, namely Section 5 of the FTC Act (15 U.S.C. § 45), which is the law that empowers the agency to punish deceptive practices. 

The Green Guides provide common-sense instruction on green marketing strategy, and more specific guidance on particular marketing terms that were popular in 1998, including “biodegradable,” “compostable,” “recyclable,” “refillable,” and “ozone safe.”  The new proposed Green Guides address those terms, but also provide guidance on new terms and concepts found in present-day green marketing, such as:

• environmental seals of approval,
• “free-of” and “non-toxic” claims,
• carbon offsets,
• claims concerning renewable energy, and 
• claims concerning renewable materials. 

Given the explosion of environmental marketing claims in recent years, revised Green Guides are well overdue.  But what kind of impact will they have?  The new Guides do not really change the rules; the FTC has always identified the Green Guides as “guides” useful in applying consumer protection law.  Ultimately, product claims for clean technologies will be evaluated under the FTC Act itself, for their potential to deceive consumers.  If claims are vague and unqualified, or cannot be substantiated by scientifically proven facts, they are going to be suspect. 

The FTC provides a brief summary of the proposed Green Guides here, provides the complete Guides with analysis and comment here; public comments on the proposed Guides may be submitted here.  Read more insightful commentary on the new Green Guides here, and here.

Guest Blogger Joseph ("Jay") Eckhardt is an attorney at Stoel Rives LLP, based in Portland, Oregon.