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The Federal Trade Commission announced last week filing of four consent decrees and an administrative complaint relating to companies selling various personal care products – shampoos, sunscreens, moisturizers – featuring claims such as “all natural” or “100% natural.”  The FTC alleges that these claims were false or misleading because all of the products at issue contain one or more synthetic ingredients.

Companies that have fought consumer class actions relating to natural claims and followers of FDA’s rulemaking regarding natural claims on food products are well aware that calling something “natural” can be a lightning rod.  However, FTC has previously opted to stay above the fray, as it did when declining to include “natural” as a defined term in the revised Green Guides.  So, what’s this enforcement all about?

Simply put, it’s more about “all” than about “natural.” Based on the complaints released, the FTC’s concern is that the companies falsely stated that their products contained only natural ingredients when, in fact, they did not.  There is no discussion in the complaints about the manufacturing processes that the products undergo or whether the ingredients could be of either natural or synthetic origin.  In short, the FTC did not need to delve into how any other agency defines “natural” and did not do so.

Rather, these cases are important for two main reasons: First, they underscore the agency’s position that where advertising conveys that a product meets a certain threshold, i.e., “all” or “no,” the agency expects the products to meet those standards.  Second, although the FTC has not engaged on the “natural” issue before this, it is not afraid to use its authority on such claims to prevent alleged deception.

 

 

green_seals_verticalOn September 14, FTC staff sent warning letters to five providers of environmental certification seals and 32 businesses that display them online, alerting them to the agency’s concerns that the seals may be deceptive and may not comply with the FTC’s Green Guides.  Although the warning letters do not identify which certifiers, seals, or businesses were targeted, they do confirm the FTC’s continued interest in “green” marketing.

The FTC Green Guides state that an environmental certification or seal of approval may imply a general environmental benefit claim when it does not specify the basis for the certification, either through the name or some other means.  The Guides further advise marketers that they may prevent deception by accompanying the seal with “clear and prominent language that clearly conveys that the certification or seal refers only to specific and limited benefits.”

Although the Green Guides are primarily directed at marketers of environmental claims, the warning letters indicate that certifiers themselves may also be on the hook.  In the warning letter directed to certifiers, FTC staff notes its concern that the seal at issue does not convey the basis for the certification and may be considered deceptive under Section 5 of the FTC Act.  Moreover, although the certifiers’ websites provide information to marketers regarding their use of the logo, they do not instruct marketers to use qualifying language.

The warning letter directed to marketers further provides that the seal featured on the company’s website may deceptively convey that a product offers a general environmental benefit because it is not accompanied by clear and prominent qualifying language limiting the seal to a specific benefit or benefits.  In some cases, even if consumers click on the seal for more information, the seal itself does not likely convey an effective hyperlink that leads to the necessary disclosures (FTC directly references its .Com Disclosures here).

Even though the FTC did not disclose which companies received the letters, the FTC’s action provides a few key insights for both certifiers and marketers of certifications and seals.

What certifiers can do:  

  • Create seals or logos that incorporate the basis for the certification directly into the seal or logo, so that consumers do not have to look further to understand the specific product attributes tested or certified
  • Clearly convey to marketers that further qualifying language may be needed when it comes to their specific product.

What marketers can do:

  • Make sure consumers will understand the basis for the certification when the seal is placed on the website, product, or packaging.
  • If the basis for certification is not clear from the seal or logo itself, consider placing additional qualifying language in close proximity to better inform consumers of the specific and limited benefits for certification.
  • Don’t assume consumers will simply click on a seal’s icon online for further explanation. Consumers may just view the icon as another graphic on the page.

On May 18, 2015, the FTC announced a settlement with Nice-Pak Products, Inc., concerning claims that its moist wipes are “flushable,” “break apart after being flushed,” and are “safe” for sewer and septic systems. Nice-Pak marketed and sold its flushable wipes primarily through private label brands, such as Costco’s Kirkland Signature Moist Flushable Wipes, CVS’s Flushable Cleansing Wipes, Target’s Up & Up Flushable Moist Wipes, and BJ’s Family & Toddler Moist Wipes.

The FTC complaint contends that, because of their composition, Nice-Pak’s non-woven fabric wipes did not break down in water in a reasonably short amount of time. Moreover, the complaint alleges that that Nice-Pak did not have substantiation for these performance claims because its tests did not accurately reflect the real-world conditions that Nice-Pak wipes would encounter after being flushed (i.e., conditions that exist in household toilets, plumbing, or septic systems, or in public sewer systems or public wastewater treatment facilities).

The FTC’s proposed consent order prohibits the company from making claims about any moist toilet tissue unless the company has competent and reliable evidence to support such claims. The order does not, however, define the period of time in which a product must break down in order to be considered “flushable” or “safe.” The order would require only that the substantiation: (1) demonstrate that the wipes disperse in a sufficiently short amount of time after flushing to avoid clogging or other operational problems in household and municipal sewage lines, septic systems, and other standard wastewater equipment; and (2) substantially replicate the physical conditions of the environment where the wipes are likely to be disposed.

The FTC began investigating products claimed to be “flushable” back in 2013. The issue gained media attention shortly after the Washington Post ran a story on ‘flushable’ personal wipes clogging sewer systems around the country. In December 2013, Consumer Reports followed up with testing showing that, although toilet paper breaks apart in seconds, several brands of flushable wipes took at least 10 minutes to break into small pieces. Often times, wipes can reach a pump within just a couple of minutes.

The moral of the story is – don’t just “take the plunge” when advertising your products; companies should make sure that they have “backed up” their claims with adequate substantiation that reflects real-world conditions. Companies should also track consumer complaints and media reports because those can often trigger regulatory investigations.

Decision Also Reiterates Appropriate Standards for Consumer Perception Surveys

On February 6, 2015, Chief Administrative Law Judge D. Michael Chappell announced his decision (“Initial Decision”) in the case of FTC vs. ECM BioFilms.  The Initial Decision rejects the FTC’s position codified in the FTC’s Guides for the Use of Environmental Marketing Claims (“Green Guides”) that “[i]t is deceptive to make an unqualified degradable claim for items entering the solid waste stream if the items do not completely decompose within one year after customary disposal.”   Judge Chappell was unpersuaded by the survey results submitted by the FTC to support its interpretation of unqualified “biodegradable” claims, ruling that the survey design “fails to comport with generally accepted standards for survey research, as well as the legal standards used by the Commission, and is insufficiently reliable or valid to draw any material conclusions.”

Our advisory provides an analysis of the key takeaways from the Initial Decision.

Last week, the FTC announced it had reached another settlement with a plastic lumber company regarding its green marketing claims.  This is the FTC’s third settlement in five months relating to environmental claims for plastic lumber products (the other cases involved N.E.W. Plastics Corp. and American Plastic Lumber, Inc.).

The FTC’s complaint alleges that Engineered Plastics Systems, LLC (“EPS”) marketed its plastic lumber products – including picnic tables and benches – as made of “recycled plastic,” made “entirely of recycled plastic lumber,” or having an “all recycled plastic design.”  The FTC alleges that while consumers would likely interpret the claims to mean that the products are made from all, or virtually all, recycled plastic, the products contained, on average, only about 72 percent recycled plastic.  The products also contained some non-recycled plastic and a mineral component.

The proposed consent order with EPS prohibits the company from misrepresenting the recycled content or environmental benefit of any product or package.  For any recycled-content claims, the company must substantiate the claims by demonstrating that the content of its product or package is composed of materials that have been recovered or otherwise diverted from the waste stream.  The FTC’s consent order will remain effective for 20 years.

The FTC announced last week that it had reached a settlement with N.E.W. Plastics Corp., d/b/a Renew Plastics, over allegedly improper recyclability and recycled content claims.  The company manufactures plastic lumber products – including its Evolve and Trimax brands – used primarily in outdoor decking and furniture.  According to the FTC’s complaint, the company claimed that its Evolve brand was 100% recyclable and contained over 90% recycled high density polyethylene (ReHDPE) material.  The company also advertised its Trimax brand as recyclable and made of 90% post-consumer recycled material.

The FTC alleges that the claims were deceptive because Evolve contains (at most) 58% recycled plastic, while the recycled plastic in Trimax contains (on average) less than 12% post-consumer recycled content.  FTC also alleges that the products are not “recyclable” because local recycling centers where the products are sold do not accept the products due to their non-plastic content and size and weight.  Furthermore, the cost of shipping the products to the manufacturer under its take-back program generally exceeded the amount consumers were paid for returning the items.

The proposed consent order prohibits the company from misrepresenting the recycled content of its products, including the amount of post-consumer recycled content.  The order also prohibits advertising the products as “recyclable” unless: (1) the entire item, excluding minor incidental components, can be collected through an established recycling program; and (2) recycling facilities are available to a substantial majority (i.e., more than 60%) of consumers or communities where the products are sold; otherwise, the advertising must clearly and prominently disclose the limited availability of recycling and the extent to which it is limited.

This is the first time the FTC has enforced its 60% substantial majority threshold for recycling claims.  Marketers can be sure, however, that the FTC will continue to look closely at these kinds of claims.

The FTC recently announced that it had reached a settlement with Down to Earth Designs, d/b/a gDiapers, regarding composition, biodegradability, compostability, and disposability claims featured on the company’s infant diaper products.   gDiapers markets and sells baby wipes (gWipes), disposable diaper liners (gRefills), and reusable diaper shells (gPants). According to the FTC’s complaint, the company advertised both gRefills and gWipes as biodegradable and compostable absent any qualification to either claim and, in some instances, as “certified biodegradable.”  The company also claimed that gPants were plastic-free, that users could “flush, compost, or toss” gRefills, and that gWipes would break down “much faster than any other disposable baby wipes on the market.”

The FTC alleges that the claims were deceptive because gDiapers did not have adequate substantiation for its claims or, in the case of the “plastic-free” claim, simply weren’t true.  The proposed consent order requires gDiapers to have competent and reliable scientific evidence to support its claims and refers to specific standards consistent with the FTC’s Green Guides.

The lesson for marketers here is a basic one that applies to all advertising, but particularly environmental messaging:  beware of broad, unqualified claims.  Consumers have varying interpretations of what “biodegradability” means and how long it might take, but the FTC has one interpretation, and it’s found in the Green Guides.  We also note that the gDiapers order prohibits “free of” claims absent competent and reliable scientific evidence.  The FTC previously addressed “free of” claims last year relative to “no-VOC” claims and settled on more specific terms than those found in the gDiaper order.

The Federal Trade Commission (“FTC”) announced settlements with three mattress manufacturers last week that prohibit the manufacturers from making claims that their products are free from volatile organic compounds (“VOCs”) absent competent and reliable scientific evidence.

The companies involved – Relief-Mart, Inc., Essentia Natural Memory Foam Company, Inc., Ecobaby Organics, Inc. – are all alleged to have advertised their mattress as free from VOCs and similar claims absent the requisite level of substantiation. The FTC’s complaint against Ecobaby further alleges that the company made unsubstantiated third-party certification claims. Specifically, Ecobaby allegedly displayed the seal of the National Association of Organic Mattress Industry (“NAOMI”) to indicate that the product met the organization’s quality and manufacturing standards. In fact, the FTC alleges, NAOMI is not an independent, third-party organization but is an alter ego of Ecobaby.

The proposed orders bar Relief-Mart, Essentia, and Ecobaby, from making VOC-free claims unless the VOC level is zero micrograms per cubic meter or the company relies upon competent and reliable scientific evidence that its mattresses contain no more than trace levels of VOCs, based on the guidance in the FTC’s Green Guides. The orders also bar environmental benefit or attribute claims, and certain health claims, unless they are true, not misleading, and supported by scientific evidence.

Manufacturers looking to make “No-VOC” or other environmental marketing claims should ensure that claims are properly substantiated and qualified as necessary. The updated Green Guides include guidance regarding proper substantiation of “free of” claims. The Green Guides also address certifications and seals of approval, which tend to be very persuasive to consumers, and may also implicate the agency’s Endorsement and Testimonial Guides.
 

In October, I posted an update on the FTC’s revised Green Guides. The Guides are designed to help marketers ensure the claims they make about the environmental benefits of their products are truthful and not misleading. Since then, Practical Law Company asked me to write a more detailed article about the Guides and what companies need to do to comply. You can read the new article here.