23 California DAs Obtain $1.5 Million Settlement for Deceptive Biodegradable Claims
Environmentally conscious consumers often look for products advertised as “green.” But labeling plastic products as “biodegradable” may land you on the legal compost heap if you can’t meet federal and state regulations governing green marketing. Amazon was just the latest company to find itself in the crosshairs when 23 California district attorneys charged that it violated state law when it marketed and sold products labeled “biodegradable” or “compostable.” Amazon settled the lawsuit for $1.5 million.
Most advertisers interested in degradability and similar claims should be familiar with the requirements in the FTC’s Guides for the Use of Environmental Marketing Claims. Advertisers also need to be aware of 2011 amendments to the California Public Resources Code restricting green claims for plastic products. The California law prohibits businesses from selling plastic goods that are labeled “compostable,” “biodegradable,” “degradable,” or other wording that implies the product will break down in a landfill or other environment, unless the product meets specific standards set forth in the law. There are differences, however, in how the FTC and the state of California view available standards from a substantiation standpoint.
Under the settlement, Amazon is prohibited from selling plastic products labeled as “biodegradable” or “compostable” if the product has not been certified as such in accordance with California’s requirements. In addition, the company will pay CalRecycle, the state agency responsible for recycling, $50,000 to test plastic products that are advertised as compostable or degradable.
California has shown itself to be an aggressive enforcer against misleading green marketing claims. In the last few years, the state has pursed legal action against several companies for alleged deceptive green labeling, settling claims against ENSO Plastics in 2013 with an $18,000 fine, and obtaining agreed-to penalties of $27,000 and $940,000 against Overstock.com and Walmart, respectively, in 2017. It is worth noting that any penalties received under the California law go directly to the jurisdiction that brings suit, providing DAs with an incentive to pursue degradable and compostable claims.
Any advertiser interested in developing and marketing products that are degradable or compostable should pay special attention to the requirements of both federal and state laws since they do not always align. In particular, it is essential for businesses to fully understand the nuances of FTC guidance and California law in assessing how they substantiate their claims.