Bamboozling - Part I: Do Green Claims Require a Life Cycle Analysis?

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The title of this series is an homage to the great Lesley Fair, who launched and authors many of the best of the FTC’s business blogs and who coined this term in her blog reviewing 2013 cases on the same topic. But we are here today to talk about the most recent settlements involving textiles labeled “made from bamboo.” And in homage to bamboo as the world’s fastest-growing plant, we will “stalk up” on blogs for the week based on this case, as there is a lot to chop down here. But we do not want to bury today’s lessons in excessive leaves; the first takeaway is that apparel and home goods retailers everywhere should fertilize their compliance programs and root out any made-from-bamboo textile claims that may be germinating on websites. The broader issue is whether all brands should reassess their general green claims to make sure they are appropriately qualified.

On Friday, the FTC announced it would receive record-setting penalties in cases involving two large retailers over sales of sheets, towels, and clothes labeled as allegedly being made from bamboo fabric. The issues in these cases were twofold: (1) bamboo is not a recognized fiber name, so calling stuff “made from bamboo fabric” may violate the Textile Labeling Act and the Textile Fiber Rule, and (2) green claims involve calling bamboo “sustainable,” when the process to make rayon from bamboo typically involves a non-earth-friendly number of chemicals. As noted above, this is not the first time the FTC has brought enforcement action over such claims. The first cases were from 2009, after which the FTC followed up by sending 78 warning letters to retailers about such bamboo claims, with a synopsis letter (sound familiar?) detailing previous administrative cases involving violations of the Textile Act. Thus, from the FTC’s point of view, these companies were on notice such that for any future violations, penalties could be assessed. (Wonky point of fact: Most specific laws the FTC enforces allow penalties by their terms. In the Textile Act, Congress said violations would be treated like any other violation of the general FTC Act, which does not allow penalties for first-time offenses. Then, in 2013, the FTC settled with a group of large retailers that had received the letters. This was followed by another set of cases in 2015 against multiple large retailers. One group paid $1.26 million collectively and another second paid $1.3 million, versus the most recent $5.5 million settlements; hence, the FTC’s claim to “largest-ever civil penalty” for bamboo claims.

So the FTC is not really treading on any new ground here, but it is clear the agency expects brands to have very long memories and pay attention to warning letters received more than a decade prior. (More on this in the next blog in this series.) Make sure that even if you call out their bamboo origin, your textile products are labeled and advertised as made from rayon or viscose even if the base cellulose is bamboo. We recommend that any retailer of textiles do a sweep for any such products. The FTC complaints and press releases trumpet that each retailer sold “dozens” of such mismarked products. For retailers that sell hundreds if not thousands of different SKUs, this may not seem like such flagrant violations, but the FTC seems to have a different view of what constitutes compliance.

The more difficult issue is what to take away from the condemnation of the environmental claims. The settlement agreements prohibit the companies from claiming the products are sustainable, renewable, or environmentally friendly. The Green Guides are clear that general environmental claims must be qualified lest consumers take away a broader unintended and unsupported message. If products are promoted as “sustainable, as derived from bamboo,” is that deceptive if there are negative effects on the environment from processing? In other words, is it enough to qualify green claims, or does every claim require a life cycle or trade-off analysis? Perhaps when the Green Guides review gets underway this year, we will have the opportunity to discuss this issue and get some new guidance, particularly in the area of what does and does not constitute a supported “sustainable” claim. Many of us have heard FTC staffers say with regard to the Green Guides that the FTC is a “consumer protection agency, not an environmental agency.” That said, it would be a mistake to do anything to deter companies from taking incremental steps to improve their environmental footprint with a policy and/or deprive consumers of such information when they are making their purchasing choices.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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