NCPA - National Center for Policy Analysis


June 22, 2009

Companies touting eco-friendly products or biodegradable packaging are supposed to abide by guidelines issued by the Federal Trade Commission in 1992.  The FTC can take companies that ignore the so-called "Green Guides" to court and seek fines to reimburse consumers.  However, the FTC has taken almost no enforcement action over the last decade, even as "green" marketing claims have exploded, says USA Today.

In fact, there has been little to no enforcement of the 1992 guides:

  • From 1992 to 2000, the FTC generally filed two or more complaints a year, but enforcement dropped off under President Bush.
  • Since May 2000, the FTC has taken legal action against only three companies for violating the guidelines; all three complaints were announced June 9, the day of a congressional hearing about environmental marketing.
  • FTC's James Kohm acknowledges that the agency hasn't aggressively enforced its main environmental guidelines in recent years, in part because of a lack of resources.
  • The agency has, however, cracked down on energy-related claims, such as products that purport to raise a car's gas mileage.

The FTC is a small agency with a huge mission and very limited resources, says Kohm.  And more cases are expected to be announced with the recent explosion of environmental marketing.  A survey last year by environmental marketer TerraChoice of 12 large U.S. stores found more than 1,700 products that boasted of green credentials.

With one-third of consumers relying on labels to decide whether a product is environmentally friendly, the FTC needs to strongly enforce its guidelines, says USA Today.

Source: Traci Watson, "'Green' claims by marketers go unchecked," USA Today, June 21, 2009

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