PREPARED STATEMENT OF

THE FEDERAL TRADE COMMISSION

on

“IT’S TOO EASY BEING GREEN:

DEFINING FAIR GREEN MARKETING PRINCIPLES”

Before the

COMMITTEE ON ENERGY AND COMMERCE

SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION

UNITED STATES HOUSE OF REPRESENTATIVES

Washington, DC

June 9, 2009
 This written statement represents the views of the Commission. My oral presentation and 1

responses to questions are my own, however, and do not necessarily reflect the views of the

Commission or any individual Commissioner.

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I. Introduction

Chairman Rush, Ranking Member Radanovich, and Members of the Committee, I am

James A. Kohm, Associate Director of the Enforcement Division in the Bureau of Consumer

Protection at the Federal Trade Commission (“FTC” or “Commission”). I appreciate the 1

opportunity to appear before you today to discuss the Commission’s role with respect to

environmental advertising claims.

 In the past few years, there has been a virtual tsunami of environmental marketing. 

Businesses in a diverse array of industry sectors are touting the “green” attributes of their

products and services, and several major retailers have launched their own green product lines.

The FTC plays an important role in helping to ensure that these environmental advertisements

are truthful, substantiated, and not confusing to consumers. In fulfilling this role, the

Commission employs a multi-tiered approach. First, the agency promulgates rules and guides

(the “Green Guides”) to make the “rules of the road” clear for businesses. Second, the FTC

challenges fraudulent and deceptive advertisements through enforcement actions. In fact, today

the FTC announced three complaints alleging that Kmart Corporation, Tender Corporation, and

Dyna-E International made false and unsubstantiated claims that their products were

biodegradable. Finally, the FTC publishes materials to help consumers make informed

purchasing decisions. This testimony describes the FTC’s work in each of these three areas.
 FTC Act, 15 U.S.C. §§ 41-58. Other statutes include the Energy Policy and Conservation Act, 2

42 U.S.C. §§ 6201-6422, and the Petroleum Marketing Practices Act, 15 U.S.C. §§ 2801-2841.

 Under the FTC Act, the Commission can issue rules that define with specificity unfair or 3

deceptive acts or practices in particular industries. 15 U.S.C. § 57a. The Commission may seek

civil penalties for knowing violations of these rules. 15 U.S.C. § 45(m)(1)(A). The Commission

also issues rules that have the force and effect of law pursuant to specific Congressional

mandates. See, e.g., Energy Policy and Conservation Act, 42 U.S.C. § 6294; Petroleum

Marketing Practices Act, 15 U.S.C. § 2823. In contrast, FTC guides “are administrative

interpretations of laws administered by the Commission for the guidance of the public in

conducting its affairs in conformity with legal requirements.” 16 C.F.R. § 1.5. Conduct that is

inconsistent with the guides may result in enforcement action by the Commission, if, after

investigation, the Commission has reason to believe that the conduct is unfair or deceptive in

violation of the FTC Act.

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II. Business Guidance and Rulemaking

The FTC does not establish environmental standards or encourage particular claims or

consumer behavior based on environmental policy concerns. Rather, the agency’s role in the

environmental arena involves its traditional consumer protection authority: ensuring that

consumers do not become the victims of unfair or deceptive practices. The Commission’s

authority stems from the Federal Trade Commission Act (“FTC Act”) as well as several other

statutes. Pursuant to these statutes, the Commission has developed a variety of rules and guides 2

related to energy and environmental marketing practices, including (1) guidance to help

marketers ensure their environmental claims are truthful and substantiated, (2) requirements for

energy use disclosures on most major home appliances and lighting products, and (3) rules

mandating disclosures for automotive fuels.3

A. The Commission’s Green Guides

The Commission’s Guides for the Use of Environmental Marketing Claims (“Green

Guides” or “Guides”), 16 C.F.R. Part 260, are the centerpiece of the agency’s environmental

marketing program. The Guides help marketers avoid making green claims that are “unfair or
 57 Fed. Reg. 36363 (Aug. 13, 1992). The Commission revised the Guides in 1996 and in 4

1998. 61 Fed. Reg. 53311 (Oct. 11, 1996); 63 Fed. Reg. 24240 (May 1, 1998).

 Under FTC law, it is illegal to make advertising claims that are likely to mislead reasonable 5

consumers. See FTC Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103

F.T.C. 110, 174 (1984). To determine if a claim is likely to mislead, marketers must determine

how consumers interpret the claim. The Commission’s guidance on consumer interpretation can

be useful if consumer perception is not self-evident.

 Marketers must possess a reasonable basis substantiating the objective claims they make about 6

their products and services. See FTC Policy Statement on Advertising Substantiation, appended

to Thompson Medical Co., 104 F.T.C. 648, 839 (1984). In the context of environmental

marketing claims, such substantiation will often require competent and reliable scientific

evidence, defined as tests, analyses, research, studies, or other evidence based on the expertise of

professionals in the relevant area, conducted and evaluated in an objective manner by persons

qualified to do so, using procedures generally accepted in the profession to yield accurate and

reliable results. 16 C.F.R. § 260.5.

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deceptive” in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). The Commission

issued the Guides in 1992 to address confusion surrounding the meaning and proper use of

proliferating green claims. The Guides explain how consumers understand commonly used 4

environmental claims, such as “recyclable” and “biodegradable,” and describe the basic 5

elements needed to substantiate those claims. They also provide examples that demonstrate 6

how to qualify specific claims to avoid deception. This guidance assists marketers in making

truthful and substantiated statements about the environmental attributes of their products and

services.

The Commission currently is reviewing its Guides to ensure that they are responsive to

today’s marketplace. The Commission periodically reviews the efficacy, costs, and benefits of

each of its rules and guides. The agency initiated review of its Green Guides a year earlier than

planned in response to the explosion of green marketing. In November 2007, the FTC sought

public comment on several issues, including the continuing need for the Guides, their efficacy,
 72 Fed. Reg. 66091 (Nov. 27, 2007). 7

 Information about the review, including the workshop transcripts and written comments, is 8

available online at www.ftc.gov/green.

 72 Fed. Reg. 66094 (Nov. 27, 2007); 73 Fed. Reg. 11371 (Mar. 3, 2008); 73 Fed. Reg. 32662 9

(June 3, 2008).

 The comments are available online at 10 http://www.ftc.gov/os/comments/greengudesregreview/

index.shtm, http://www.ftc.gov/os/comments/carbonworkshop/index.shtm,

http://www.ftc.gov/os/comments/greenpkgworkshop/index.shtm, and

http://www.ftc.gov/os/comments/buildingandtextilesworkshop/index.shtm

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and whether they should address certain green claims, such as “carbon neutral” and

“sustainable,” that were not common when the Commission completed its last review.7

To develop a robust record upon which to base its guidance, the Commission also held a

series of public workshops on emerging green marketing issues. The workshops brought

together representatives from industry, government, consumer groups, environmental

organizations, and the academic community to explore the marketing of carbon offsets and

renewable energy, green packaging claims, and claims for green building and textiles. The 8

Commission also sought additional public comment in connection with each workshop. To 9

date, the FTC has received nearly 200 written comments from various individuals and

organizations.

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In its requests for public comment and at the workshops, the Commission specifically

solicited consumer perception data. This information would help the Commission provide

accurate, informed advice on consumer understanding of green claims. Unfortunately, few

commenters submitted such information. Without this data, the Commission would face the

difficult choice of either providing guidance that might inadvertently chill otherwise useful green

claims or forgoing valuable guidance altogether. The Commission, therefore, plans to conduct
 See 74 Fed. Reg. 22396 (May 12, 2009) (requesting comment on the FTC’s consumer 11

perception study, as required by the Paperwork Reduction Act).

 Because many currently used green claims such as “sustainable” and “carbon neutral” were

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not common when the Commission last revised the Guides, FTC staff also is reviewing the state

of green marketing claims by conducting an Internet surf to analyze the nature and incidence of

particular claims. FTC staff plans to issue its findings in the near future.

 Information about these rulemakings is available online at 13 www.ftc.gov/energy.

14 72 Fed. Reg. 49948 (Aug. 29, 2007). FTC-commissioned research found that more than 85%

of recent appliance purchasers who visited a retail showroom recalled seeing a label with energy

characteristics. Of those respondents, 58% correctly recalled that the label was yellow with

black letters. Fifty-nine percent (59%) of respondents who recalled seeing a label scored the

usefulness of the label at a seven or higher on a scale of zero to ten. Id. at 49951.

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its own research. This study will focus on consumer understanding of particular green

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marketing claims, such as “eco-friendly,” “sustainable,” and “carbon neutral.” The 12

Commission expects that the survey and its analysis will be completed later this year, and that it

will help us provide sound guidance in this important and growing area. 

B. The Appliance Labeling Rule

The FTC’s Appliance Labeling Rule, 16 C.F.R. Part 305, helps consumers comparison

shop for energy-efficient appliances, lighting, and plumbing products. The Rule requires

manufacturers of most major home appliances to attach labels to their products that estimate the

product’s annual operating cost and energy use, as well as the highest and lowest operating costs

of similar models. The Rule also requires energy disclosures for certain lighting products and

water use disclosures for certain plumbing products. The Commission recently completed one

rulemaking to improve the Rule’s utility and has two others underway.13

Specifically, in 2007, the Commission improved the content and design of the familiar

yellow and black EnergyGuide label for major home appliances. The streamlined label, which

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 The Rule now requires disclosure of energy use (in watts), light output (in lumens), and life 15

(in hours) on the packaging of most light bulbs.

 Energy Independence and Security Act of 2007, Pub. L. No. 110-140, § 321. 16

 73 Fed. Reg. 40988 (July 17, 2008); 74 Fed. Reg. 7894 (Feb 20, 2009). Although the 17

Commission requested consumer perception studies related to labeling disclosures, no

commenters submitted any recent, comprehensive consumer research. 

 74 Fed. Reg. 11045 (Mar. 16, 2009). 18

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now prominently displays yearly operating costs for most appliances, resulted from a rulemaking

that included significant public comment and consumer research into the efficacy of various

label designs.

The Commission currently is reviewing its required energy disclosures for lighting.15

The lighting market is changing, and Congressional standards will eliminate low-efficiency light

bulbs over the next several years. Given these changes, Congress asked the FTC to consider 16

the effectiveness of lighting disclosures to help consumers understand newer, high-efficiency

products, such as compact fluorescent lamps and light-emitting diodes. To aid in this endeavor,

the Commission solicited public comment and commissioned consumer research on alternative

labeling approaches.17

In addition, the Commission initiated a rulemaking in March to explore energy labeling

for televisions and other consumer electronics. Some of today’s large televisions use as much 18

energy as refrigerators. However, consumers can choose among a variety of technologies that

differ significantly in their energy usage. Energy labels that disclose the product’s operating

costs or energy use, therefore, could assist consumers seeking to make more energy-efficient

choices.

C. Fuel Rating Rule
 For gasoline, the fuel rating is the octane rating. For alternative fuels, the fuel rating is the 19

minimum percentage by volume of the principal component of the fuel.

 73 Fed. Reg. 12916 (Mar. 11, 2008). The biodiesel fuel rating is the percentage by volume of 20

biodiesel or biomass-based diesel in the fuel.

 74 Fed. Reg. 9054 (Mar. 2, 2009). 21

 K-mart Corp., File No. 082-3186 (June 9, 2009) (accepted for public comment); Tender 22

Corp., File No. 082-3188 (June 9, 2009) (accepted for public comment); Dyna-E Int’l, et al.,

Docket No. 9336 (June 9, 2009). Past FTC cases have targeted a range of other allegedly false

or unsubstantiated green advertising claims, such as claims that a product or its packaging is

recyclable, non-toxic, or ozone safe. See, e.g., FTC v. OneSource Worldwide Network, Inc., et

al., No. 3:99-CV-1494-L (N.D. Tex. July 1, 1999) (challenging claims that liquid-filled discs

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The Fuel Rating Rule, 16 C.F.R. Part 306, provides consumers with information about

the fuel they use in their automobiles. Among other things, it requires retailers to post the fuel’s

rating on a label at the pump. Last year, the Commission amended the Rule to incorporate 19

specific labeling requirements for biodiesel, biomass-based diesel, and blends of those fuels, as

required by the Energy Independence and Security Act of 2007, Pub. L. No. 110-140. In 20

addition, the agency currently is reviewing the Rule to ensure that it continues to benefit

consumers and to determine if other changes are needed to account for the development of new

alternative fuels.21

III. Law Enforcement Efforts

It is critical to complement business guidance and rules with a solid law enforcement

presence. The Commission, therefore, actively enforces its requirements through civil

prosecutions. The agency’s recent efforts in this area target misleading green claims, false

energy savings claims, and bogus gas-saving devices.

The Commission’s latest enforcement actions alleged that three companies made false

and unsubstantiated claims that their products were biodegradable. The FTC’s complaints

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effectively clean laundry without polluting the earth’s waterways and are 100% recyclable); RBR

Productions, Inc., 122 F.T.C. 471 (Dec. 10, 1996) (cited in Lexis as 122 F.T.C. 444)

(challenging claims that a disinfectant is biodegradable, non-toxic, and environmentally safe,

and that an aluminum aerosol can is recyclable); Texwipe Co., 116 F.T.C. 1169 (Oct. 8, 1993)

(challenging ozone safe claims for an aerosol cleaning product).

 Therefore, the companies’ actions allegedly contravene the Green Guides’ advice concerning 23

the term “biodegradable.” See 16 C.F.R. § 260.7(b).

 K-mart Corp., File No. 082-3186 (June 9, 2009) (accepted for public comment); Tender 24

Corp., File No. 082-3188 (June 9, 2009) (accepted for public comment).

 Dyna-E Int’l, et al., Docket No. 9336 (June 9, 2009). 25

 United States v. Meyer Enterprises, LLC, et al., No. 09-1074 (C.D. Ill. Mar. 2, 2009). The 26

defendants claimed that their product’s R-value was 7.54, but the Commission alleged that it

could be no more than 2.

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alleged that the companies could not substantiate that their products would decompose into

elements found in nature within a reasonably short period of time after customary disposal.23

According to the complaints, the substantial majority of solid waste is disposed in landfills,

incinerators, and recycling facilities, and these disposal methods do not present conditions that

would allow the products to completely break down and return to nature within a reasonably

short period of time. Two companies settled the Commission’s charges, and the third is in

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administrative litigation.25

The Commission also recently targeted marketers of home insulation for overstating the

insulating properties of their products. In one case, the agency alleged that the insulation’s Rvalue (the measure of its resistance to heat flow) was only about one quarter of what the

defendants claimed in their advertising. The court order settling the Commission’s charges 26

requires the defendants to pay a $155,000 civil penalty, revise the challenged claims, and

substantiate any future energy-related efficacy claims. The defendants in a second case also
 United States v. Enviromate, LLC, et al., No. 09-CV-00386 (N.D. Ala. Mar. 2, 2009); United 27

States v. Edward Sumpolec, No. 6:09-CV-379-ORL-35 (M.D. Fla. Feb. 26, 2009).

 FTC v. Dutchman Enterprises, LLC, et al., No. 09-141-FSH (D.N.J. Jan. 12, 2009). 28

 FTC v. Five Star Auto Club, Inc., et al., No. 99-CIV-1693 (S.D.N.Y. Dec. 15, 2008). 29

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settled the Commission’s allegations, and in the third, the Department of Justice filed a

complaint at the agency’s request.27

In addition, the Commission is litigating two federal court actions against marketers of

“miracle” devices advertised to dramatically increase gas mileage in ordinary cars. In the first

case, the promoters of the Hydro-Assist Fuel Cell placed advertisements in major magazines

claiming that the device can boost automobile gas mileage by at least 50% and “turn any vehicle

into a hybrid.” In the second matter, the defendant advertised that the NanoDetonator would 28

allow ordinary passenger cars to harness the power of nuclear fusion, thereby eliminating the

need for gasoline. In both cases, the Commission alleged that the claims for the devices violate 29

basic scientific principles. Through litigation, the Commission is seeking a permanent halt to the

claims and reimbursement to consumers who purchased the devices.

IV. Consumer Education

In addition to business guidance, rules, and law enforcement, the Commission creates

and distributes materials to help consumers make informed, green purchasing decisions and

avoid energy savings scams. The Commission’s vast array of award-winning, consumer

education campaigns include creative online sites, as well as written materials that the agency

and its partners distribute to consumers throughout the country. 

The agency’s interactive website, Saving Starts @ Home (www.ftc.gov/energysavings),

offers tips to help consumers conserve energy and save money in almost every room of their
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homes. For example, in “the kitchen,” consumers can learn about using the EnergyGuide label

to select energy-efficient appliances; in “the attic,” consumers can find tips on choosing

insulation; and in “the trash room,” they encounter explanations of terms like recyclable and

biodegradable and the meanings of common environmental symbols. Another interactive

webpage, Saving Money at the Pump (www.ftc.gov/savegas), gives consumers advice on how to

avoid bogus gas-saving devices and suggests legitimate gas-saving tips to help consumers save

money at the pump. Since 2006, consumers have accessed these two sites and their Spanish

language counterparts over 450,000 times.

V. Conclusion

Consumer interest in conserving energy and protecting the environment will likely result

in continued environmental marketing. Competition based on green claims drives businesses to

greater innovation, which ultimately benefits consumers by increasing the availability of the

types of green products and services they desire. For the marketplace to thrive, however,

companies must compete on the basis of legitimate advertising claims and consumers must be

able to rely on those claims. The Commission, therefore, will continue its efforts to ensure the

truthfulness and accuracy of environmental marketing. 

Thank you for providing the Commission an opportunity to appear before the Committee

to describe these efforts.