Companies often market products and services as having an environmental benefit, such as being compostable, recyclable, or made with renewable energy or materials. Businesses that make these types of claims in marketing materials need to ensure that the claims are accurate and not deceptive or misleading. While claims involving environmental benefits are subject to both state and federal law, the touchstone in this area is the Federal Trade Commission Act and the “Green Guides” established by the Federal Trade Commission (“FTC”) pursuant to its authority under the Act. The Green Guides contain standards and examples to help companies understand what constitutes deceptive or misleading environmental advertising. Two manufacturers of coffee pods have faced challenges recently for labeling their products as “recyclable” and “compostable,” and for making other environmental claims in their marketing materials. These two examples highlight the difficulty manufacturers face with making accurate claims regarding the environmental benefits, especially given that composting and recycling are local practices that are constantly evolving.
In the most recent case, Keurig Green Mountain, Inc. (now Keurig Dr. Pepper) faces a class action alleging that it mislabeled single-serve plastic coffee pods as “recyclable.” Smith v. Keurig Green Mountain, Inc., Docket No 18-cv-06690-HSG (N.D. Cal. June 28, 2019). According to the Green Guides, “[a] product or package should not be marketed as recyclable unless it can be collected, separated, or otherwise recovered from the waste stream through an established recycling program for reuse or use in manufacturing or assembling another item.” 16 C.F.R. § 260.12(a). The Green Guides further state that “[i]f any component significantly limits the ability to recycle the item, any recyclable claim would be deceptive” and that when recycling facilities are available to less than 60% of consumers where the item is sold, all recyclability claims should be properly qualified. 16 C.F.R. § 260.12(d), (b)(1). Keurig filed a motion to dismiss the class action based, among other reasons, on the grounds that its advertising claims were consistent with these standards, in part because it advised consumers to “check locally” regarding recyclability. However, the complaint alleges that Keurig’s coffee pods are not recyclable at all because most municipal recycling facilities aren’t capable of capturing such small, light materials from the recycling stream. The court therefore refused to dismiss the action at this early stage, but Keurig will have additional chances to establish that its marketing claims are accurate as the case develops.
The other recent decision involves Kauai Coffee Company, LLC, which makes a variety of environmental claims in connection with its single-serve coffee pods. In re Kauai Coffee Company, LLC, Case No. 6078 (NAD May 5, 2017). For instance, Kauai’s print and online marketing materials claimed:
- “Don’t trash the Earth with your coffee. Brew & Renew.”
- Kauai Coffee comes in “new certified 100% compostable pods that work in all K-Cup brewers.”
- “Compostable in industrial facilities. Check locally, as these do not exist in many communities. Not certified for backyard composting.”
- “Now you can enjoy the great taste and convenience of single-serve coffee without worrying about the environmental impact. Our certified 100% compostable pod is compatible with all K-cup brewers and is designed to go back to the land – not the landfill.”
These claims were reviewed by the National Advertising Division of the Better Business Bureau, a private entity that provides guidance to the advertising industry. The Green Guides deem a claim of compostability accurate if it is compostable in a home compost pile or if the claim is accompanied by qualifying language explaining that the product cannot be composted at home and that the appropriate composting facilities are not available in most places where the item is sold. 16 C.F.R. § 260.7. Kauai coffee included the appropriate qualifying language on its product, as shown above, but failed to do so on other online and print advertisements. The National Advertising Division found that the failure to include the qualify language next to the claim of compostability in these advertisements was misleading and therefore recommended that Kauai discontinue or modify the claims. The National Advertising Division also recommended that Kauai discontinue general claims such as: “Don’t trash the Earth with your coffee. BREW & RENEW.” General environmental claims are difficult to support and are more likely to be deemed deceptive. Kauai agreed to comply with all of these recommendations.
At bottom, marketing materials that make claims regarding environmental benefits must be carefully crafted and based on sufficient evidence, whether they relate to compostability, recyclability, or other environmental benefits of a product or service. Given that consumers are growing ever more interested in the environmental benefits of products and services, companies will continue to include environmental benefits in advertising, but this must be done appropriately and in compliance with the Green Guides as well as any applicable state laws.