Greenwashing: What Your Clients Should Avoid

Vol. 28 No. 6

By

Michelle Diffenderfer is a shareholder and Keri-Ann C. Baker is an associate with the Florida law firm of Lewis, Longman & Walker, P.A.

 

There is no doubt that eco-friendly products have an edge in our eco-conscious society. We are drawn to products that make us feel good about buying them. Put simply—green is good for business. Nonetheless, consumers are becoming skeptical of these eco-friendly product claims, prompting environmental and consumer rights groups to take steps to expose misleading claims.

The term “greenwashing” has been coined to refer to the phenomenon of eco-exaggeration. At its heart, greenwashing is the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service. The federal government, state governments, and consumers are taking action to combat those persons and entities that engage in exaggerated marketing of the environmental attributes of products, services, and companies.

The Federal Trade Commission’s Green Guides. The Federal Trade Commission (FTC) is revising its “Guides for the Use of Environmental Marketing Claims,” more commonly referred to as “Green Guides,” a year earlier than planned owing to the rise in consumer complaints about greenwashing. The Green Guides detail what companies that engage in eco-marketing should do in terms of substantiation, specificity, general claims, seals of approval, and eco-seals certification. The Green Guides are the FTC’s administrative interpretation of Section 5 of the Federal Trade Commission Act (FTC Act) as applied to environmental marketing. Although the Green Guides do not have the force of law, they provide advertisers with a safe harbor to avoid lawsuits for unfair or deceptive environmental advertising.

State laws. Individuals and companies that engage in greenwashing may also face legal liability under state laws. Many states have enacted so-called baby or little FTC Acts. Florida, for example, has adopted the Florida Deceptive and Unfair Trade Practices Act, which prohibits unfair or deceptive acts or practices in commerce. Additionally, Florida has adopted laws that prohibit all misleading advertisements and allows plaintiffs to recover both attorney fees and punitive damages. Other states, such as California, have adopted strong consumer protection laws that can be used to address green-washing. California has adopted the Consumers Legal Remedies Act and the Unfair Competition Law. Further, it is likely that plaintiffs could bring common-law claims for greenwashing, including, among others, fraudulent misrepresentation and breach of warranty claims.

Litigation. To prevail under Section 5 of the FTC Act, a plaintiff must show that either an advertisement is facially or literally false or that, although the advertisement is not literally false, the advertisement is likely to mislead or confuse consumers. In the former case, consumer deception is presumed. In the latter, a plaintiff must present proof of actual consumer deception or confusion.

The FTC has increased its enforcement activities regarding the advertising of green products. In 2009, the FTC filed complaints against companies that allegedly made deceptive, misleading, false, or unsubstantiated green claims regarding the makeup of products or the degradability of certain products. These complaints were followed with a campaign of warning letters to another group of companies in 2010. All these complaints and warning letters were based on existing laws and rules such as the FTC Act, the Textile Fiber Products Identification Act (Textile Act), the Textile Rules, and the currently adopted Green Guides.

In August 2009 the FTC charged four companies selling clothing and other textiles with deceptive labeling and adverting. The FTC alleged that these companies made the false and unsubstantiated “green” claims that their textile products were manufactured using an environmentally friendly process, that the products retained the natural antimicrobial properties of the bamboo plant, and that the products were biodegradable. The companies entered into settlement agreements that bar them from claiming that any of their textile products are made of bamboo or bamboo fiber, that they are manufactured using an environmentally friendly process, that they are anti-microbial or retain antimicrobial properties, or that they are biodegradable unless the claims are true, not misleading, and substantiated by competent and reliable evidence.

In early 2010, pursuant to the authority of the Textile Act and Rules and Section 5 of the FTC Act and the Green Guides, the FTC sent letters to 78 well-known companies with warnings that their respective advertisements could subject them to a public enforcement action. The FTC warning letters arose over the companies’ alleged marketing practices of labeling and advertising their rayon textile products as “bamboo.”

It seems clear that the FTC will continue to use the FTC Act and the Green Guides, independently and in combination with other federal laws and rules, to bring public enforcement claims against companies making false or misleading green claims about their products or the environmental attributes of their products.

Private enforcement in the courts. In addition to FTC enforcement actions for greenwashing, companies can also face civil litigation from private parties such as consumers and competitors under federal and state law. Several recent cases demonstrate how federal and state consumer protection laws are being applied to claims of alleged greenwashing. For example, in Paduano v. American Honda Motor Company, 169 Cal. App. 4th 1453 (Cal. Ct. App. 2009), a consumer brought a claim for alleged violations of federal and state laws over alleged greenwashing. The plaintiff alleged that a hybrid vehicle only obtained half of the advertised 51 miles per gallon and that he had “read and relied on the statements Honda made in an advertising brochure.” The trial court granted Honda’s summary judgment on all of its claims. The California appellate court held that although the car’s failure to achieve the mileage estimate did not make the car defective under the warranty claim, the plaintiff could bring a claim against Honda under state law for unfair and deceptive advertising as to its hybrid vehicle and that such claims were not preempted by federal law.

A consumer class action lawsuit was filed in federal court in California over alleged greenwashing pertaining to the common cleaning products Windex and Shout under California’s Unfair Competition Law, California’s False Advertising Law, and the Consumer Legal Remedies Act, claiming that the labeling of the products was misleading. The products contained a trademarked “Greenlist” seal and stated that “Greenlist is a rating system that promotes the use of environmentally responsible ingredients.” The court denied defendant’s motion to dismiss, finding that the plaintiffs had alleged a cause of action based on the allegedly misleading advertising through the use of the Greenlist seal, which appeared to be a third-party rating seal but was actually an internally created marketing seal.

Grassroots consumer action. Greenwashing can give rise to grassroots campaigns aimed at debunking the exaggerated environmental claims and even legal action. A greenwashing report conducted by TerraChoice Environmental Marketing, Inc., estimated that 98 of the products it surveyed engaged in at least one greenwashing sin. TerraChoice has defined seven sins of greenwashing that have been used throughout the industry: (1) the hidden trade-off (“suggesting a product is ‘green’ based on an unreasonably narrow set of attributes without attention to other important environmental issues”); (2) no proof; (3) vagueness; (4) irrelevance; (5) fibbing; (6) the lesser of two evils (“claims that may be true within the product category, but that risk distracting the consumer from the greater environmental impacts of the category as a whole”); and (7) false labels. Consumers have developed websites and blogs devoted to revealing and debunking greenwashing claims.

 

More Information About the Section of Environment, Energy, and Resources

This article is an abridged and edited version of one that originally appeared on page 21 of Natural Resources & Environment, Winter 2011 (25:3).

For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.

Website: www.americanbar.org/environ.

Periodicals: Natural Resources & Environment, quarterly magazine; Trends, bimonthly newsletter; The Year in Review, annual summary of legal developments; committee newsletters.

Books and Other Recent Publications: The Clean Water Act Handbook, 3d ed.; The Law of Clean Energy: Efficiency and Renewables; Environmental Aspects of Real Estate and Commercial Transactions: From Brownfields to Green Buildings, 4th ed.; Brownfields: A Comprehensive Guide to Redeveloping Contaminated Property, 3d ed.; The Law of Green Buildings: Regulatory and Legal Issues in Design, Construction, Operations and Financing; Endangered Species Act: Law, Policy, and Perspectives, 2d ed.; The Evolution of Natural Resources Law and Policy; Nanotechnology: Environmental Law, Policy, and Business Considerations; Environmental Litigation: Law and Strategy; Ocean and Coastal Law and Policy; and the Basic Practice Series with titles including FERC, 2d ed.; and CERCLA, 2d ed.

CLE and Other Educational Programs: 19th Section Fall Meeting, October 12–15, 2011, Indianapolis, Indiana; 30th Annual Water Law Conference, February 22–24, 2012, San Diego, California; 41st Annual Conference on Environmental Law, March 22–24, 2012, Salt Lake City, Utah.

 

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