by Rosanne Yang

Does your brand want to advertise its great work to make its product – or its manufacturing process – more environmentally friendly, socially responsible, or healthy? Are you a retailer that is eager to tout the good work of the brands you carry? If so, be aware that recent class action lawsuits are indicators of growing risks around such claims. The good news is that there are steps you can take to inform, document, and defend these types of claims.

Recent Cases

In November, a law firm filed a class action lawsuit against the maker of Chinet brand disposable plates regarding packaging that asserts the plates are “eco-friendly” and “made with recycled material and compostable.” The complaint alleges that the plates contain chemicals that do not break down in composting and that will contaminate the entire compost stream, making the resulting compost unusable.

In October and November, class action lawsuits were filed against Diestel Turkey Ranch regarding a variety of advertising claims about the Diestel brand turkeys, which appear both on the product and the Diestel website, including that the turkeys are “raised on sustainable family farms” with “individual care and a wholesome diet” and that the turkeys are raised in conformity with the Global Animal Partnership Animal Welfare Certified program. The complaint asserts that instead, many of the Diestel turkeys are raised at factory farms that do not meet these claims.

These cases allege damages that include the allegedly inflated prices that consumers pay for more sustainable products, and assert claims under a variety of other federal and state laws. Although these claims were brought against the brand owners themselves, the Federal Trade Commission has been known to take aim at retailers who repeat their suppliers’ claims in their own advertising.

Substantiating Environmental, Social, and Health-Related Claims

Most companies are familiar with the general concepts of advertising law – be truthful, accurate, and clear, have documentation to support your claim, and for any limitations on claims, make them conspicuous in their disclosure. But when it comes to environmental, social, and health-related claims, the work involved in having documentation to support your claim (substantiation) can prove quite complex. There are a variety of considerations that often require reaching back to the very beginnings of product design and manufacturing.

No matter where in the supply chain your company sits – component supplier, final manufacturer, brand, or retailer - it is not enough to simply rely on what someone previous in the chain says. Rather, it is necessary to obtain, analyze, and maintain appropriate documentation of the claims – and of course adjust the claims you make as warranted.

These types of claims are no after-thoughts that can be applied on a whim at the final stages of production or advertising. So, as a practical matter, what should you be looking for or considering when deciding what claims to make about the product, whether that be on product packaging, an online product description, or printed advertising?

Regulations and Contract Terms

In addition to the basic advertising law principles, there can be regulations that impose more specific requirements on the expression of a claim or the disclosure of any limitations. For instance, the FTC has issued its Green Guides, and USDA requires that regulated products sold as “organic” must have at least 95% certified organic content and those sold as “made with organic” must have at least 70% certified organic content.

There can also be restrictions imposed by contract from your suppliers on what you say in advertising or labeling. For instance, in the textile industry, certain branded fibers are marketed as being more environmentally friendly. If your product contains these fibers, you (a) may need a license to use the fiber’s brand name, and (b) that license may come with contractual requirements regarding how you talk about the branded fiber.

Always find out whether there are specific requirements that apply to the types of claims you would like to make.

Testing

Some claims, such as BPA free or phthalate free, require testing to substantiate. If you are the brand wanting to apply such a claim to your products, be sure to understand these items about the testing facility and the test being performed:

• Is the facility an accredited testing facility?

• Is the test consistent with any applicable regulations?

• Is the test consistent with industry best practices?

• What is the test not testing for?

Regarding the last question, you may be surprised to find that some tests are designed to look for only top indicators or certain types of a class of chemical rather than for all of them. That may be acceptable, but it will depend on a variety of factors.

If you are a retailer, obtain a copy of the test report and ensure it is from an accredited testing facility and supports the claim before echoing the claim in your own advertising materials or online product descriptions.

Supplier Monitoring

Claims such as “not tested on animals” or around carbon footprint reductions and water conscious manufacturing require a level of transparency to the supply chain that can be hard to construct. If your organization has or is developing a supply chain monitoring program ask questions such as:

• How deep into the supply chain does the transparency go? There are often many suppliers involved in the making a product, and even multiple facilities where the products are handled during the course of production. Without qualification of a claim to “final product” or the like, it may be difficult to obtain the level of transparency needed to legally support a claim.

• What is the nature of the process documentation at each step? Does it support the claim?

• How strong are auditing processes – are they likely to detect misinformation?

• Are there strong policies or contractual penalties in place that effectively encourage suppliers to stay on the path and similarly control their own suppliers?

Third-Party Certifications

Third-party certifications of a product, its components, or the manufacturing process or facility are a great way to ease the burden of substantiating claims. But they are not silver bullets. No matter whether you are a brand, a manufacturer, or a retailer, before asserting a certification as an advertising message, ask yourself:

• Is this certification program a credible program? Factors that can undermine its credibility include whether the supplier itself runs the program or has a financial or other material interest in it; whether participants in the program self-certify versus having third-party audits or inspections; and whether it is possible to obtain the certification simply by paying a licensing fee for the logo and operating on the honor system.

• Has the certification been issued by a credible assessor? Many certification programs have approved assessors, and you want to make sure the certificate is issued by one of them if applicable. Even if there is no approved list of assessors, there should be some confidence that the assessor is qualified and independent.

• Has the certification been issued to your supplier? If the certified company is someone other than your supplier, you need to find out the role of the certified company. Sometimes you will find that the certified company has made only a small component of the product, which will limit your ability to make broad claims about the product itself.

• Has the certification been issued regarding the product or product components involved in the product you are selling? Ask for transaction certificates or other documentation that show the connection of the product to the certified components.

• What claims does the certification actually support? Be careful not to overstate it.

• Are there any requirements from the certification organization regarding how the certification is used or presented, or what kinds of claims may be made in relation to it?

Always be on the lookout for red flags such as redacted information; incomplete documentation; or pictures, addresses, or names that do not match up to expected information.

Start Early and Involve Cross Functional Teams

Because many environmental, social, and health claims are dependent on the manufacturing process, it is critical to start early and design into the claims you want. There should be close cooperation between product development teams, quality control or other production teams, merchants, marketing teams, and legal counsel to ensure that when the advertising is finally done, everyone feels that the claims are right for the brand and worthy of the effort associated with substantiating them, and the claims can be defended if challenged. And be patient – depending on timelines for product development and marketing, setting up the infrastructure to support these types of claims easily take a year or longer.