Gray Areas for Green Labels: The Current State of Environmental Marketing
“Natural,” “green,” “sustainable,” “biodegradable,” – it seems like everywhere you look, from the big box stores to your local farmer’s market, products are being marketed for their environmental and healthful benefits. For a range of reasons, consumer demand for ecologically conscious or healthy products is exploding and the market is responding. The increasing demand for these goods has not gone unnoticed by federal regulators. The Federal Trade Commission (the “FTC”) has been closely monitoring the booming use of these terms in marketing and advertising materials. At the top of the marketing food chain is the term “organic,” which is tightly regulated and requires pre-certification from the U.S. Department of Agriculture. However, the majority of terms are not so stringently regulated. In fact, most terms fall within a gray area requiring no certification or verification prior to use. Such terms may appear beneficial to businesses given their low upfront investment and strong consumer demand, but use of such terms is increasingly exposing businesses to a landscape fraught with legal risk.
To help alleviate ambiguity for consumers and the business community, the Federal Trade Commission released a revised guidance for environment-related claims in October of 2012. The revised guidance, which the FTC called its “Green Guides,” warns marketers not to make unqualified claims about the level of a product’s environmental friendliness unless the company can point to competent scientific evidence substantiating such claims. The revisions focused on five terms or categories of terms: “free-of/non-toxic,” “biodegradable or compostable,” “recyclable and made with recycled content,” “renewable materials, renewable energy, and carbon offsets,” and certifications/seals. While the guidance itself does not carry the weight of law, the FTC uses its legal authority within the Bureau of Consumer Protection to bring enforcement actions against vendors making environmental claims that are allegedly unfair or deceptive. And bring claims it does: In January of 2013, the FTC imposed penalties on four national retailers totaling $1.26 million for falsely labeling textile products as natural bamboo when they were rayon (Amazon.com, Inc.; Leon Max, Inc; Macy’s, Inc.; and Sears, Roebuck and Co.). Claims were also brought against businesses using the term “biodegradable” when products did not break down within a reasonably short period of time (K-Mart paper products; Tender Corp baby wipes; Dyna-E International paper towels; and 20 manufacturers of dog waste bags claiming bags were “biodegradable” and “compostable”). Although the FTC claims the aim of its Green Guides is to minimize ambiguity for both consumers and the business community, it failed to provide guidance on what is likely one of the most widely used terms on the market: “natural.”
After direct requests from consumers and consumer protection groups for regulation of the term “natural,” in November of 2015, the federal government responded. The U.S. Food and Drug Administration (the “FDA”) initiated a comment period to help inform the development of guidance that would include a definition for the term “natural” on food labels. One of the major challenges facing the FDA in this effort will be determining if the definition of “natural” should apply only to the food product itself or if it should also include food production methods, such as pesticides and pasteurization. The comment period closed May 10, 2016 (comments available here). The FDA now has the monumental task of weighing disparate interests in producing guidance that achieves some level of consensus.
Consumer groups are not waiting for the federal government to provide a definition of “natural” before filing class action lawsuits against businesses currently using the term on packaging. Most recently, in May of 2016, a group of consumers seeking to challenge the terms Quaker Oats Company uses in its marketing materials filed suit in federal court. The plaintiffs claim Quaker Oats falsely and deceptively labels and markets its products as, among other things, “Natural,” and “100% Natural,” when the products contain glyphosate, a synthetic biocide, used in both farming practices and applied to the grain itself. Plaintiffs contend that these practices are not “natural” and thus, use of such terms constitutes unfair and deceptive acts and false advertising under California Law. The plaintiffs have asked the court to issue an order requiring Quaker Oats to engage in a corrective advertising campaign disclosing the presence of the biocide within its product, recall previously labeled products, refund consumers, and pay attorney’s fees for opposing counsel.
As the legal landscape surrounding the use of terms related to environmental and healthful benefits continues to shift, businesses should carefully assess all labeling decisions, especially the use of any terms listed in the FTC’s Green Guides and use of the term “natural.” Businesses should also carefully analyze the ingredients and processes used in generating its products as a new series of labeling laws similar to that in Vermont requiring food containing genetically engineered ingredients to be labeled (now awaiting a decision from the Second Circuit), is likely to be enacted in other states or on the federal level.
The attorneys at Verrill Dana can help clients develop and market products that have the environmental and healthful benefits that consumers demand while minimizing the gray areas of risk posed by green labels