FTC Slaps Kmart With 'Fake Green' Charges

FTC Slaps Kmart With 'Fake Green' Charges

by Sarah Mahoney, Yesterday, 5:31 PM

In its ongoing efforts to protect consumers from the increasingly sneaky "greenwashing" terms used by marketers, the U.S. Federal Trade Commission (FTC) has charged Kmart Corp. with making "false and unsubstantiated claims" that its private-label paper products are biodegradable.

In its settlement, Kmart has agreed to stop making deceptive "degradable" product claims for its American Fare private-label paper plates. "We relied on the vendor's documents to substantiate the claim," says a spokesperson for Sears Holding Corp., which owns Kmart. "And these plates are biodegradable in a backyard compost."

The problem, observers say, is that such rulings don't do much to eliminate consumer confusion. "It's not so much that Kmart is being called out for the inaccuracy of saying the product is biodegradable," says Liz Gorman, VP of corporate responsibility for Cone Inc., a leading brand strategist. "It's saying that the way most people dispose of paper plates, they'll never have a chance to."

"In truth and in fact," the FTC says in its complaint, "American Fare paper plates will not completely break down and return to nature, i.e., decompose into elements found in nature, within a reasonably short period of time because a substantial majority of total municipal solid waste is disposed of by methods that do not present conditions that would allow for American Fare paper plates to completely break down."

The charges, which also include two other companies, come at a time when the FTC is looking to crack down on greenwashers. Its first Green Guides were written in 1992, when the universe of green claims was relatively small. But with the explosion of environmental claims made on behalf of increasingly mainstream products, the group has taken steps to update its policies. Last year, it conducted three workshops to learn about how it can more effectively protect consumers from deceptive marketing practices.

At this point, Gorman says, "our research has shown us that 70% of consumers want to buy the product that is better for the environment, provided it fits their budget. They understand that there are some tradeoffs, and that few products are perfect, but they do want to lessen the impact they have on the environment with the goods they buy. They have a high level of confidence -- and right now, we know it is a false confidence -- that companies tell them the truth in their environmental claims."

Meanwhile, the FTC is trying to get a better read on the level of consumer confusion. Currently, it has a proposal with the U.S. Office of Management and Budget, "to see if we can conduct some consumer perception research this summer that will assist us in guiding industry on green claims," says Michael Davis, an attorney with the FTC. "It's important for us to know what consumers think. We're active in this area, and the public and the industry can expect us to continue hearing from us as the months go by. Stay tuned."