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FTC to Issue New Green Guidelines, Address 'Tsunami' of Marketing Claims

Confused about products claiming "organic," "fair trade" or "eco" benefits? How about the "WindMade" or "BioPreferred" labels, launched this year?

No wonder. The number of green labels that tout environmental virtues is proliferating, as are complaints about them, such as clothes labeled as "bamboo" that are actually rayon.

Help may be on the way. The Federal Trade Commission is updating its guidelines this year for environmental claims, and the U.S. government now requires, as of January, that all products bearing its Energy Star logo undergo third-party testing to prove they're more efficient than regular items. Previously, it required testing of only some products.

On May 10, TVs that qualify for its blue logo will have to carry the same yellow-and-black labels, listing annual energy use, that now appear on Energy Star appliances.

"Solutions are emerging," says Scot Case of UL Environment Inc., a company based in Northbrook, Ill., that tests products. He says the FTC is cracking down on vague, unsubstantiated claims, in part by requiring independent product testing.

"Customers and retailers have gotten frustrated," Case says. "They're asking for proof." He expects the FTC's rules will weed out weaker labels in favor of those verified by his group as well as other testing entities such as Green Seal, Green Guard, Eco Logo, Energy Star and the U.S. Department of Agriculture, which has "organic" and "biopreferred" (products with agricultural ingredients) labels.
FTC warns against unsubstantiated claims

"We saw this tsunami of green marketing claims" and decided to revise the rules, or "Green Guides," a year early, says James Kohm, associate director of FTC's enforcement division. The guides, first issued in 1992, were last updated in 1998.

That "tsunami" now includes at least 367 environment-related product labels worldwide, according to Anastasia O'Rourke, co-founder of Big Room Inc., which tracks them with its Ecolabel Index.

Of the current total, 146 labels are used in the USA, many dealing with construction and personal-care goods.

"For the first time, we proposed you should never make unsubstantiated claims," says Kohm, who expects the revisions to be finished by year's end. The agency is warning marketers not to make blanket claims such as "eco-friendly" but to be specific.

For example, a "recycled" claim should specify how much of the product or package is recycled and whether it's "post-consumer" (previously used goods) or "pre-consumer" (manufacturing waste).

"It's going to help provide clarity," says David Mallen of the Council of Better Business Bureaus. He says his group has received more than a dozen complaints about environmental claims in the past year, up from a handful in prior years. He says most are from companies that say competitors are making overly broad claims, such as touting a laundry detergent as a "better environmental choice."
No 'army of green police'

"Few companies are making bald-faced lies," says Joel Makower, executive editor of, which reports on corporate sustainability.

Kohm agrees that in most cases, companies are "stepping over the line," or exaggerating, rather than deliberately misleading consumers. He says they do so because of competition or uncertainty, adding: "There's a fair amount of confusion out there."

He says the FTC has taken action, such as warning 78 retailers, including Wal-Mart, Target and Kmart, last year to stop marketing rayon products as "bamboo," but it won't become "an army of green police."

"What we try to do," Mallen says, "is clarify the line and reduce the competitive pressure to step over it."

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