Consumer groups call for FTC to use consistent and comparable fuel economy ratings in advertising guide
In April, the Federal Trade Commission (FTC) proposed amendments (74 Fed. Reg. 19,148) to its Fuel Economy Advertising Guide, in order to make it consistent with Environmental Protection Agency’s fuel economy ratings. A collective of consumer advocacy groups, including Consumer Federation of America, Consumer Action, and Consumers for Auto Reliability and Safety submitted their comments to the proposed revisions. Central to the consumer groups’ concerns is that advertising assist consumers in making informed decisions when buying vehicles. A significant factor in accomplishing this goal is to make published, consistent, and fully disclosed fuel economy ratings readily accessible to the consumer.
In response to the Guide’s indication that any combination of city, highway, and combined fuel economy may be used, the consumer groups urge that advertising should use only the combined city and highway fuel economy rating. The consumer groups warn against advertisers having a choice which rating to use as this impedes consumers’ ability to easily make ready and accurate comparisons between advertised vehicles.
Similarly, the consumer groups urge against allowing advertisers to make fuel economy claims based on non-EPA information, even when the advertising fully discloses that it is a non-EPA estimate. The consumer groups explain that allowing use of the non-EPA estimates in advertising will prevent comparison to the EPA ratings, which will defeat consumers’ ability to compare advertising information.
“Not only do consumers need a reliable and clear mechanism to assess fuel efficiency when shopping for a vehicle, but the presence of mileage ratings in the market provides a strong competitive incentive for fuel economy improvements overall,” said Jack Gillis, CFA's Director of Public Affairs and author of The Car Book
In response to the Guide’s indication that an estimated cruising range may be used for alternative fueled vehicles, the consumer groups support efforts by the FTC to provide comparable performance information to consumers. The consumer groups recommend an easily understood and comparable “fuel economy equivalent” system, like the miles per gallon fuel economy estimates, possibly based on kilowatt hour.
Finally, the consumer groups strongly recommend requiring the posting of EPA estimated combined fuel economy in all vehicle advertisements.
FTC files "greenwashing" charges against three companies based on eco-friendly advertising claims
The Federal Trade Commission announced on June 9, 2009 that it charged Kmart, Tender Corp., and Dyna-E International with making false and unsubstantiated claims that their products were “biodegradable.” The charges were announced in testimony before the US House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce. (FTC prepared statement: “It’s Too Easy Being Green”) Kmart and Tender agreed to consent decrees to settle the charges against them and the case with Dyna-E will proceed in administrative litigation with the FTC.
The FTC action is based on its “Green Guides,” which govern environmentally- and climate-friendly claims in advertising. Among other things, the Green Guides require that any unqualified claims that a product is biodegradable be based on scientific evidence that it will completely decompose within a reasonably short period of time under customary methods of disposal. The FTC alleges that the products identified in its complaints against these companies are typically disposed in landfills, incinerators, or recycling facilities where it is impossible for waste to biodegrade within a reasonably short time. The charges were based on Kmart’s using the word “biodegradable” to describe its American Fare disposable plates, Tender Corp. using the word to describe its Fresh brand moist wipes, and Dyna-E calling “biodegradable” its Lightload brand compressed dry towels.
The FTC’s testimony before Congress was presented by James A. Korn, Associate Director of the Enforcement Division in the FTC’s Bureau of Consumer Protection. Korn testified that “[i]n the past few years, there has been a virtual tsunami of environmental marketing,” marketing touting the “green” attributes of products and services. He said that the FTC plays an important role in helping to ensure that these environmental advertisements are truthful, substantiated, and not confusing to consumers. The agency, Korn said, accomplishes its role in two ways, first by publishing guidelines regarding appropriate advertising, and second, by bringing enforcement actions such as the ones announced this week. The Green Guides help marketers avoid making claims that are “unfair or deceptive” in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). The Guides explain how consumers understand commonly used environmental claims, such as “recyclable” and “biodegradable,” and describe the basic elements needed to substantiate those claims. The FTC plans to study consumers’ understanding of claims that were not common in 1992 when the Green Guides were originally written, including claims that products are “sustainable” and “carbon neutral.” (See also our previous post: “FTC Updating Green Guides.”)
Other recent enforcement actions by the FTC involving environmental marketing have involved two claims by marketers of “miracle” devices advertised to dramatically increase mileage in ordinary cars. (See e.g., FTC v. Dutchman Enterprises) In both cases, the FTC alleged that the claims for the devices violated basic scientific principles. Through litigation, the agency is seeking a permanent halt to the claims and reimbursement to consumers who purchased the devices.
FTC updating Green Guides, which govern environmental building claims
Original post available at www.constructionweblinks.com.
The Federal Trade Commission’s Green Guides, which govern environmental marketing claims, will be updated this year. The Green Guides are the FTC’s primary tool for preventing consumer deception in the ever-expanding arena of environmental claims. The manual was last updated in 1998. This year’s version will clarify the legal parameters for environmental promises made to consumers and business clients.
The Green Guides are intended to prevent “greenwashing” – claims of environmental superiority or benefit that are untruthful or misleading. Companies may engage in greenwashing in an effort to sell more products or to bolster their reputation with consumers.
The revised Green Guides will address questions such as:
- What does it mean to promise that a product or service is “green” or “sustainable”?
- What steps has a company taken to earn a third-party certification or seal stating that the company’s products or services do not cause harm to the environment?
The FTC is fast-tracking this year’s update to ensure that these and other questions are answered and appropriate guidelines are in place.
Third-party certification is a growing trend in construction. Fourteen percent of cities with 50,000 or more residents have green building programs. These programs require that buildings meet certain environmental standards. The US Green Building Council, a Washington, DC non-profit organization, publishes one set of green building standards relied on by municipalities.
Green building claims can come up in a variety of contexts. In Shaw Development v. Southern Builders (No. 19-C-07-011405, Somerset County, Maryland), the contractor agreed that the luxury condominium project would be environmentally friendly. The contract required that the completed condominiums be certified by USGBC. The contract was a standard AIA form that included the certification requirement through specifications and incorporation of a Project Manual. The certification requirement read:
Project is designed to comply with a Silver Certification Level according to the US Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”
When USGBC did not certify the completed condominiums, the developer sued the contractor, claiming $635,000 in lost tax credits. Maryland offers state tax credits of up to 8 percent of a project’s total cost for buildings that 1) are greater than 20,000 square feet and 2) are certified under the USGBC standards.
Although the Shaw Development case settled before trial, it demonstrates the importance of a complete understanding of the green building certification process before making representations or taking on contractual obligations.
