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Legal Review: FTC’s ‘Tested Green’ Action Catches Phony Certification Red-Handed

1 Mar, 2011 By: Jeffrey D. Knowles, Venable LLP’s Advertising, Gary D. Hailey Response


Legal

On Jan. 11, the Federal Trade Commission (FTC) announced that it had reached a consent agreement with Nonprofit Management LLC and its owner, which allegedly offered a worthless “Tested Green” environmental certification to any business willing to pay for it.

On Background

Late last year, the FTC proposed a number of revisions to its Guides for the Use of Environmental Marketing Claims (“Green Guides”). One of the most significant changes in the proposed new Green Guides is a new section on the use of environmental certifications and seals of approval in advertising.

The proposed Green Guides have not been given final approval by the FTC, but the Jan. 11 announcement of the Tested Green consent agreement shows that the agency is already taking action against deceptive advertising of environmental certifications and seals of approval.

The ‘Tested Green’ Complaint

According to the FTC’s complaint, Nonprofit Management marketed and sold the Tested Green certification as “the nation’s leading certification for green businesses with over 65,000 certifications in the United States.” The Tested Green certification — which cost either $189.95 or $549.95 — included a package of advertising tools the certified company could use to tell consumers about its Tested Green certification.

The Tested Green website said applicants would have to answer questions about their green practices and perhaps provide documentation or allow an on-site inspection visit to verify that they met applicable environmental standards. But the FTC complaint alleges that the company did nothing to verify that applicants engaged in green practices. According to the complaint, every applicant that provided Tested Green with a valid credit card received a certification.

The FTC complaint focuses on possible deception of consumers. Rather than alleging that Tested Green deceived the companies who purchased a certification, the agency alleged that Tested Green “provided businesses with the means and instrumentalities for the commission of deceptive acts and practices.” In other words, Tested Green gave its customers advertising and promotional tools that could be used by those companies to deceive their customers.

There is a good chance that the FTC is also investigating some of the companies that purchased Tested Green’s certification and used the certification in their advertising. While some of these companies might have honestly believed that the Tested Green certification was legitimate, the FTC’s view might be that the phony nature of the certification was so obvious that companies that used it in their advertising either knew or should have known it was bogus. Don’t be surprised if the FTC announces a consent agreement or a complaint against one or more companies certified by Tested Green in the not-too-distant future.

The Bottom Line

The FTC recognizes that bona fide environmental certifications from industry trade associations or others can benefit consumers by providing verification that a product or service has certain “green” attributes. But the agency also believes that seals of approval can confuse or even mislead the public.

It seems obvious that someone who sells phony green certifications could run afoul of the FTC or a state attorney general. What may not be as obvious is that a company that purchases such a certification and uses it to promote its goods or services could also be found guilty of deceptive conduct.

When it comes to certifications, an ounce of prevention could literally be worth a pound of cure. Companies deciding to pursue a “green” certification should perform some basic due diligence on the program before beginning the certification process or providing payment. If a company has taken appropriate steps to ensure that a certification program is legitimate beforehand, the odds that it will face regulatory enforcement because of the certification program are greatly diminished. ■


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