FTC fights "green" claims

The Federal Trade Commission, in its ongoing attempt to crack down on companies claiming the "green" attributes of their products, has charged Kmart Corp (NYSE: KM), Tender Corp. and Dyna-E International with making false and unsubstantiated claims that their paper products were “biodegradable.”

Since 1992, the FTC’s “Green Guides” have aimed to help marketers avoid making false claims about the origin and make-up of their products. While the guides are not enforceable by law, if a company makes claims that are not in line with the guides, the FTC can take legal action under Section 5 of the FTC Act, which prohibits unfair or deceptive practices.

According to the Green Guides, products marketed as "biodegradable" are supposed to decompose within a reasonably short period of time under conventional disposal methods. FTC claims the products labeled "biodegradable" by the defendents in this case typically are disposed in landfills, incinerators or recycling facilities, where it is impossible for waste to biodegrade within a reasonably short time.

The agency says, with the growth of "green" consumer products on the market, it is committed to ensuring that environmental marketing is "truthful, substantiated and not confusing to consumers." The public can comment on this case, or send compaints about other products, by visting FTC's Web site.

Kmart, which filed for bankruptcy in 2002, and is now owned by Sears Holding Corp. (Nasdaq: SHLD), agreed to stop labeling its American Fare brand disposable plates "biodegradable." Tender Corp. a family owned and operated business based in Littleton, N.H., labeled its Fresh Bath-brand moist wipes "biodegradable." And Dyna-E International, based in Jamaica, N.Y., makes quick-dry towels that it labeled "biodegradable."

The "Green Guides" have not been updated since 1998 but last year the FTC held a series of workshops to create guidelines for the emerging carbon offset, sustainable packaging, sustainable textiles and green building industries.