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Expert Insight on the New Federal Trade Commission’s Green Marketing Guidelines

GoGreen Portland Conference – October 16, 2014. Expert Insight on the New Federal Trade Commission’s Green Marketing Guidelines. Presenter:. Carol Pratt, Ph.D. JD One SW Columbia St., Suite 1900 Portland, OR 97258 503.226.5762 c arol.pratt@klgates.com. FTC’s Green Guides.

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Expert Insight on the New Federal Trade Commission’s Green Marketing Guidelines

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  1. GoGreen Portland Conference – October 16, 2014 Expert Insight on the New Federal Trade Commission’s Green Marketing Guidelines • Presenter: • Carol Pratt, Ph.D. JD • One SW Columbia St., Suite 1900 • Portland, OR 97258 • 503.226.5762 • carol.pratt@klgates.com

  2. FTC’s Green Guides • FTC first issued Green Guides in 1992 • FTC revised Green Guides in 1996 and 1998 • FTC proposed revisions in October 2010 • Released final revised Green Guide in October 2012 klgates.com

  3. FTC’s Revised Green Guides – 16 CFR Part 260 klgates.com

  4. FTC’s Revised Green Guides – Highlights • Substantiation • A claim is deceptiveif it is likely to mislead consumers acting reasonably under the circumstances and is material to consumers’ decisions • Before making a claim, must ensure that: • “all reasonable interpretations” of claim • are truthful and not misleading, and • supported by a reasonable basis • Often requires competent and reliable scientific evidence • Must substantiate explicit and implicit claims klgates.com

  5. FTC’s Revised Green Guides – Highlights • Substantiation • Tests must be done on actual product conditions (industry standards are not sufficient) • “Recyclable” claim may be misleading if there are no recycling facilities in the area where the product is marketed • “Degradable” claim may be misleading if it will not degrade within a reasonable time in the environment where it is customarily disposed in that area klgates.com

  6. FTC’s Revised Green Guides – Highlights • General claims of environmental benefit • Product is generally good for the environment • “Green” • “Eco-friendly” or “environmentally friendly” • “Eco-smart” • “Sustainable” • FTC warns against use of such claims • They are vague, misunderstood by consumers and too broad to be substantiated • Must add qualifiers – clearly and prominently displayed • Net environmental benefit must be > de minimis klgates.com

  7. FTC’s Revised Green Guides – Highlights • Certifications & seals of approval • Deceptive to imply authentication by an independent third party that, in fact, is not independent • E.g., trade association controlled by entities for which it provides certifications • Should not use unqualified certifications/seals of approval that do not specify the basis for the certification • Unqualified certifications/seals = general environmental benefit claims • Third party certification does not eliminate responsibility for substantiation klgates.com

  8. FTC’s Revised Green Guides – Highlights • Compostable claims • Unqualified claims • “100% compostable” • Are deceptive unless have scientific evidence that: • all materials in the product will decompose • within about the same time as the materials with which the product is composted • in an appropriate composting facility, or in a home compost pile or device klgates.com

  9. FTC’s Revised Green Guides – Highlights • Compostable claims • Should qualify claims if product: • cannot be composted safely or in a timely manner in a home compost pile or device, • May not be compostable when disposed of in a landfill • If facilities are not available to a substantial majority of consumers or communities where the item is sold klgates.com

  10. FTC’s Revised Green Guides – Highlights • Degradable claims • Unqualified claims are deceptive unless have scientific evidence that: • the entire item • will completely break down and return to nature (i.e., decompose into elements found in nature) • within one year of customary disposal • Unqualified degradable claims for items that are customarily disposed of in landfills, incinerators, and recycling facilities are deceptive • These locations do not present conditions in which complete decomposition will occur within one year klgates.com

  11. FTC’s Revised Green Guides – Highlights • “Free of” Claims • Claim that a product, package, or service does not contain or use a substance is deceptive if: • The product, package, or service contains or uses substances that pose the same or similar environmental risks as the substance that is not present; or • The substance has not been associated with the product category. klgates.com

  12. FTC’s Green Guides - Enforcement • Investigate unfair or deceptive acts/practices • File Complaint if FTC has“reason to believe” a violation of law has occurred • Respondent can settle or defend • If settle: • Sign Consent Agreement - without admitting liability, consent to entry of final order and waive right to judicial review • FTC posts proposed Consent Agreement on website for 30 days • FTC issues final Decision and Order klgates.com

  13. FTC’s Green Guides - Enforcement • FTC Complaint December 2013 klgates.com

  14. FTC’s Green Guides - Enforcement • FTC Complaint (MacNeill) • Product – golf tees (“FLYTees”) • Biodegradable claims • “FLYTees are completely biodegradable!” • “FLYTee is made from a specially formulated sustainable bio-plastic that enables the material to maintain durability and performance, while still breaking down into CO2 and water when it is done being used.” • Certificate of Biodegradability klgates.com

  15. FTC’s Green Guides - Enforcement • FTC Complaint (MacNeill) klgates.com

  16. FTC’s Green Guides - Enforcement • FTC Complaint (MacNeill) Note FTC offers no proof or evidence to support allegations klgates.com

  17. FTC’s Green Guides - Enforcement • FTC Complaint (MacNeill) klgates.com

  18. FTC’s Green Guides - Enforcement • FTC Decision and Order December 2013 klgates.com

  19. FTC’s Green Guides - Enforcement • FTC Decision and Order Criteria for “degradable” claim klgates.com

  20. FTC’s Green Guides - Enforcement • FTC Decision and Order Competent and reliable scientific evidence before claim is made General environmental claim must be substantiated klgates.com

  21. FTC’s Green Guides - Enforcement • FTC Decision and Order • Maintain records • For 5 years after last use of ad covered by Order of: • All ads, labeling, packaging and promotional materials • Substantiation data and unsupportive data • Notify FTC 30 days before any change in the company that could affect compliance with Consent Order • Provide to FTC within 60 days a plan for complying with Consent Order • Consent Order terminates in 20 years klgates.com

  22. FTC’s Green Guides – Take Home Messages • FTC enforcement is painful • Cannot rely on opportunity to cure (unlike FDA) • Not a level playing field • Cannot rely on actions of competitors as protection • FTC does not target everyone in the product class • Assess risk before launching ads • Develop and follow SOPs • Document, document, document • Keep documents well organized, current and ready klgates.com

  23. Questions? • Carol A. Pratt, Ph.D., JD • K&L Gates LLP • Portland, OR • 503-226-5762 • carol.pratt@klgates.com klgates.com

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