Jonathan Storper

Businesses have been ramping up efforts to “go green” for some time now due to the growing environmental consciousness of the public. A recent survey of consumer preferences found nearly 40 percent of Americans actively seek products they believe to be environmentally friendly.  

However, significant confusion exists among American consumers regarding the meaning of various phrases commonly used in green advertising, including “environmentally friendly,” “biodegradable,” “photodegradable,” “compostable,”  “recycled content” or “green.”  Businesses should, for obvious reasons, attempt to avoid being labeled with what has become one of the least desirable environmental monikers: “greenwashing.”

Greenwashing, the practice of cultivating a mistaken consumer belief that a company is more environmentally friendly than it actually is, carries with it increased legal scrutiny and risk.

Federal law
The Federal Trade Commission (FTC), the arm of the federal government in charge of enforcing advertising statutes, is expected to issue enhanced rules called the “Green Guides to Environmental Marketing” near the end of 2008. Businesses making environmental claims about products can expect a higher level of legal scrutiny following the issuance of the new rules. 

In the past, federal sanctions for violations of law have included requiring companies to stop running the advertisement;  reporting periodically to FTC staff about the substantiation for new claims; civil penalties range from thousands of dollars to millions of dollars, depending on the nature of the violation; full or partial refunds to all consumers who bought the product; and requiring new advertisements to correct the misinformation conveyed in the original advertisements.