Franchisors: Do your Environmental Marketing Claims Comply with FTC Rules?
Proceeding with the ever increasing and costly regulation on business (a separate issue better suited for a publication on politics) the Federal Trade Commission (FTC) has issued "guidelines" respecting the use of environmental claims in advertising and marketing. Considering that many franchisors and other businesses rely on environmental claims in their advertising and packaging franchisors, franchise lawyers and all business owners need to be aware of these "guidelines".
So what are some of the basics that you need to know?
(a) Guidelines. Although identified as administrative "guidelines" as opposed to new enacted regulations it is clear that the FTC will be utilizing existing law and regulation to enforce its environmental labeling requirements.
(b) Ambiguity. The guidelines are indeed ambiguous and leave much to be interpreted. As such, implementation of environmental marking claims must be planned out with your franchise attorney and general counsel.
(c) Advertising Standards. There are many components to the FTC guidelines, but some of the base elements that you must be aware of include:
Scientific Proof. When making claims like "100% ____ Free" or "Made from Recycled Materials" the FTC Guidelines require that you base these claims on scientific evidence. An example would be to have the product tested and to maintain records of the scientific company. Basically requiring you to test the product and to maintain records of the results.
Recycling Claims. The FTC guidelines require substantial qualification and evaluation of recycling claims. When claiming a product to be made from recycled materials, among other things, you must qualify the nature and volume of the recycled components. For example:
Unqualified claims of recycled content may be made if the entire product or package, excluding minor incidental components, is made from recycled material. For products or packages that are only partially made of recycled material, a recycled claim should be adequately qualified to avoid consumer deception about the amount, by weight, of recycled content in the finished product or package.
Environmental Attribute Claims. The FTC guidelines also focus on and seek to prevent what the FTC refers to as the "overstatement of environmental attribute". So product and packaging claims "should not be presented in a manner that overstates the environmental attribute or benefit expressly or by implication.
Not only is this a tough standard - i.e. one that deals with both express and "implied" marketing statement - but also one that is ambiguous. The FTC does, fortunately, offer some examples of misleading claims.
Example 1: offered by the FTC, provides some insight into application of these guidelines;
Example 2: A package is labeled "50% more recycled content than before". The manufacturer increased the recycled content of its package from 2 percent recycled material to 3 percent recycled material. Although the claim is technicoally true it is likely to convey the false impression that the advertiser has increased significantly the use of recyled material.
Prior to finalizing product labels, packaging and advertising materials it is important to evaluate the FTC guidelines. Franchisors, franchise lawyers and general counsel should establish a set program for identifying and evaluating environmental claims and establish written procedures as to each claim.
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