FTC's "Environmental" Marketing Rules: What Manufacturers, Distributors and Franchisors Need to Know
If you are a franchisor that distributes products or if you are a company that manufacturers or distributes products that contain "environmental marketing claims," you need to be familiar with the "guidelines" issued by the Federal Trade Commission (FTC).
What are "Environmental Marketing Claims"
According to the FTC, an environmental marketing claim relates to and includes "an expressed or implied claim that presents an objective assertion about the environmental attribute of a product, package or service."
Why Should You Care About Environmental Marketing Claims?
Because the FTC has interpreted existing rules and regulations to apply to environmental marketing claims. The FTC has issued guidelines that prohibit a broad range of "environmental representations" claimed by the FTC to constitute unlawful deceptive acts and practices.
What Do the FTC Guidelines Apply To?
Environmental claims included in labeling, advertising, promotional materials and all other forms of marketing whether asserted directly or by implication.
Guidelines for Environmental Claims
There are many guidelines with application to various aspects of environmental claims that, quite often, appear on products, packaging and labels. Although a full review of these guidelines goes beyond the scope of this article there are nevertheless some general guidelines and principals that franchisors, manufacturers, distributors and retailers must be aware of when designing product packaging that contains environmental claims. These general principals include:
- Reasonable Basis Requirement. When making an environmental claim (either one that is express or implied) you must possess a reasonable basis for substantiating your environmental claim. In many instances this "substantiation" requires that your environmental claims be grounded on objective scientific evidence that is specific to your product and packaging. For example, if you claim your product or packaging to be "free" of a certain chemical - do you have lab test results to back up that claim?
- Distinction between Product, Package and Service. The environmental claim must be presented in a way that makes clear whether the environmental attribute or benefit refers to the product, the product's packaging, a service or to a portion or component of the product, package or service. For example, if your packaging includes terms like "recyclable" - are you referring to both the packaging and the enclosed product?
- Must Not Overstate Environmental Attribute. The environmental marketing claim should not expressly or implicitly overstate the environmental attribute or benefit. For example, does your packaging emphasize an alleged environmental benefit that unrealistically is an attribute of every product in that category and never in environmental issue or improvement?
- Comparative Claims. When making an environmental claim that offers a comparison to other products or prior product versions of the claim itself, it must be sufficiently clear to avoid deception. Also, you must maintain evidence to substantiate this claim. For example, according to the FTC, it is deceptive to simply state that a product "contains 20% more recycled content," where no additional comparative reference is provided as to what this claim is based on, i.e. 20% more than a competitor's product? 20% more than prior packaging?
Although I believe this environmental claims regulation presents an unnecessary burden, the FTC has done a good job of offering examples and commentary to provide guidance as to these regulated issues. Franchisors, manufacturers, distributors and even retailers need to be aware of these regulations, and when it come time to designing your packaging and promotional materials, scrutinize your environmental claims and ensure compliance with the FTC rules. Doing so will avoid unnecessary litigation and consumer class action claims.
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