The fashion industry is purportedly responsible for between 4 and 8 percent of global carbon emissions, rivaling the greenhouse gas emissions of the entire economies of France, Germany, and the United Kingdom combined. To address these adverse climate effects in the fashion sector and in response to increasing consumer demand for “green” products across industries, both legislative bodies and fashion brands have looked to making fashion more “sustainable” – from the manufacturing processes to the clothing, itself.
Against this background, fast fashion companies and high fashion brands, alike, have taken to touting the environmental benefits of their clothing lines, making claims that highlight the lower carbon impact of their supply chains and factories, for instance, as well as claims that focus on the “eco-friendly” amount of water used to make a pair of jeans and the recyclability of their products and packaging.
But making recyclability and sustainability claims is not without risks that fashion brands must weigh against consumer demand. Section 5 of the Federal Trade Commission (“FTC”) Act and analogous state laws, such as California S.B. 343, regulate the content of environmental claims. And though there are some commonly used references points that guide recyclability and other environmental claims, such as the FTC’s Guides for the Use of Environmental Marketing Claims, it is not always clear what a fashion brand can and cannot say regarding the environmental impact of their offerings and manufacturing processes.
Indeed, as with nearly any recyclability claim, the ambiguities present some risk to fashion brands of potential liability and “greenxtortion” demands or other civil lawsuits if, for example, their products or packaging misrepresent (directly or by implication) the recyclability of the product and/or its packaging. Even where no misrepresentation occurs, fashion brands are increasingly seeing frivolous “greenxtortion” demands and other complaints to which they must respond, alleging, for instance, that the consumer would not have purchased the product had they realized it was only recyclable at certain facilities.
With such demands on the rise and an increasingly complex regulatory scheme with which fashion brands must comply, entities on fashion industry must ask, “Is making environmental and recyclability claims worth the risk and added costs?” For those that have answered, “yes,” there are concrete steps that they can take to reduce the risk of potential claims and related liability. The following summary provides a short overview of the requirements and prohibitions in § 5 of the FTC Act and California S.B. 343, one of the more stringent state laws on recyclability claims, the potential liabilities associated therewith, and an overview of steps fashion brands can take to reduce the risk of potential liability and associated costs.
FTC Act Section 5
Section 5 of the FTC Act (15 U.S.C. § 45) prohibits “unfair or deceptive acts or practices in or affecting commerce.” The FTC considers claims that consumer products or packaging are recyclable to be “deceptive” if they “misrepresent, directly or by implication, that a product or package is recyclable.” (16 C.F.R. §§ 260.1(a), 260.12(a)) As such, even if a recyclability claim on a garment or packaging does not directly misrepresent the recyclability of the product, at least one court has held that it may still be deceptive in violation of § 5 of the FTC Act, if a reasonable person reviewing the recyclability claim would believe that the product/packaging is recyclable when it is not. (See, e.g. Downing v. Keurig Green Mountain, Inc., 1:20-cv-11673-IT, 2021 WL 2403811 (D. Mass. Jun. 11, 2021) and see Smith v. Keurig Green Mountain, Inc. (Keurig), 393 F.Supp.3d 837 (2019)).
At least one court has held that the company advertising or marketing the recyclability of the product or packaging need not know that the claim misrepresents the product’s or packaging’s recyclability nor that that the claim could be interpreted to misrepresent the recyclability of the product/packaging, for there to be the potential for violations.
Though the FTC Act does not provide a private right of action, there is a growing trend of consumers (likely driven by entrepreneurial plaintiffs’ law firms) filing civil actions against fashion brands under state consumer protection statutes alleging misrepresentations about the environmental benefits or recyclability of the product can be implied from the claims made. Therefore, fashion brands should take steps to: (1) ensure all claims accurately reflect the recyclability of the product/packaging; and (2) assess and consider potential ways recyclability claims on packaging may be misread.
One way to ensure claims accurately reflect the recyclability or environmental benefits of a product or packaging is to add qualifiers where necessary. For example, in accordance with 16 C.F.R. § 260.12(a), “[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.”
As such, fashion brands should not make an unqualified claim that a product/packaging is recyclable unless: Recycling facilities are available to at least 60 percent of consumers or communities where the items are sold; and “[T]he entire product or package, excluding minor incidental components, is recyclable.”
If fashion brands cannot make unqualified claims of recyclability, then they should “clearly and prominently” qualify the recyclability claims on the packaging/products. Products for which “any component significantly limits the ability to recycle the item,” or that are “made from recyclable material, but, because of its shape, size, or some other attribute, [are] not accepted in recycling programs,” should not be marketed as recyclable. Improperly marketing such products as recyclable is potentially deceptive, leading to greater risk of greenxtortion and greenwashing claims and regulatory enforcement actions.
Failure to comply with the FTC Act could result in the initiation of enforcement proceedings by the FTC and civil penalties of up to $51,744 per violation. Each individual product or package could be considered a violation.
The FTC Act does not provide a private right of action, meaning a plaintiff cannot sue under the Act, but, that does not prevent private plaintiffs from filing suit alleging violations of consumer protection statutes. These and other “greenwashing” allegations related to allegedly false or misleading statements about the environmental benefits of products, packaging or practices are oftentimes facilitated by plaintiff’s counsel who scourer the marketplace for products sold by well-known brands that make sustainability and/or environmental claims.
Plaintiffs counsel then engages a “consumer” to make a purchase (typically online)of the purported offending product. Thereafter, counsel drafts a complaint wherein the shill consumer alleges that they were harmed by the misleading or false claims, whether express or implied, in violation of various state consumer protection statues. Plaintiff’s counsel sends these complaints to the brand owner along with a demand letter that invariably threatens civil suit and conversion of the suit into a class action, which would increase the potential monetary liability to fashion brands significantly. The hope of Plaintiff’s counsel is often to reach a quick monetary settlement with the brand and move on.
These greenwashing suits are becoming more prevalent thereby increasing the risks to brand owners of making sustainability and environmental claims. Greenwashing claims often, for example, directly attack the product or packaging itself alleging that consumers would not have purchased the product (or would not have paid a “premium price”) had they known the products or packaging were only recyclable at certain types of facilities. Other greenwashing claims attack the company or brand more generally, alleging for example that a company’s claims that a product is sustainable because it is made from recycled materials are misleading because the product is produced “in a high-emitting factory that pollutes the air and nearby waterways.”
California S.B. 343
California S.B. 343 (codified in part at Cal. Bus. & Prof. Code §§ 17580, 17580.5 and Cal. Pub. Resource Code § 42355.51) includes two prohibitions related to deceptive or misleading recyclability claims …
Cal. Bus. & Prof. Code § 17580.5 prohibits the making of “untruthful, deceptive, or misleading” claims of recyclability, whether explicit or implied. Cal. Bus. & Prof. Code § 17580.5(a). For purposes of this prohibition, a recyclability claim is untruthful, deceptive, or misleading if: (a) The claim does not comply with the guidance published in the “Guides for the Use of Environmental Marketing Claims,” or (b) A product or packaging includes a recyclability claim (such as the chasing arrow symbol) when the product/packaging is not recyclable in California or is not “of a material type and form that routinely becomes feedstock used in the production of new products or packaging,” unless an exception applies. A product or package is generally recyclable in California and of a material type and form that routinely becomes feedstock used in the production of new products or packaging if it is identified in CalRecycle’s Material Characterization Study and/or meets certain other stated criteria.
Cal. Pub. Resource Code § 42355.51 further prohibits the offering for sale, selling, distribution, or import into the state of California of “any product or packaging for which a deceptive or misleading claim about the recyclability of the product or packaging is made.” For purposes of this prohibition, a deceptive or misleading claim about the recyclability of the product or packaging is made when products and packaging include indications of recyclability but the products/packaging are not recyclable in California or are not “of a material type and form that routinely becomes feedstock used in the production of new products or packaging,” unless an exception applies.
A product or package is generally recyclable in California and of a material type and form that routinely becomes feedstock used in the production of new products or packaging if it is identified in CalRecycle’s Material Characterization Study, and/or meets certain other stated criteria.
CalRecycle’s Material Characterization Study must be updated every five years. Therefore, it is important to assess each package and product individually, concurrently with CalRecycle’s updates (i.e., every five years), to determine recyclability in the State of California, and to make appropriate qualifications as to recyclability as necessary.
California S.B. 343 further requires that manufacturers, including fashion brands, “who represent in advertising or on the label or container of a consumer good” that the consumer good is recyclable, must maintain and provide to members of the public upon request, the following written records and documentation “supporting the validity of the representation” …
> “The reasons the person believes the representation to be true”;
> “Any significant adverse environmental impacts directly associated with the production, distribution, use, and disposal of the consumer good”;
> Any measures taken to reduce “the environmental impacts directly associated with the production, distribution, and disposal of the consumer good”;
> “Violations of any federal, state, or local permits directly associated with the production or distribution of the consumer good”;
> Whether “the consumer good conforms with the uniform standards contained in the Federal Trade Commission Guidelines for Environmental Marketing Claims for the use of the term … ‘recyclable’ … “; and
> “[W]hether the consumer good meets all of the criteria for statewide recyclability.” (Cal. Bus. & Prof. Code § 17580(a)-(b) and (d)).
While “consumer good” is not defined, garments and their packaging are likely consumer goods. Therefore, the Fashion Industry should take affirmative steps to comply with these records retention and documentation requirements if it intends to advertise recyclability or other environmental claims.
Failure to comply with the requirements and prohibitions in Cal. Bus. & Prof. Code §§ 17580, 17580.5 “is a misdemeanor punishable by imprisonment in the county jail not to exceed six months, or by a fine not to exceed [$2,500], or both,” and further risks the initiation of private civil litigation from consumers.Cal. Bus. & Prof. Code § 17581; and see, e.g., White v. Kroger, 21-cv-08004-RS, 2022 WL 888657 at *2 (N.D. Cal. Mar. 25, 2022)(denying a motion to dismiss a complaint filed by a consumer alleging a violation of Cal. Bus. & Prof. Code § 17580.5 despite the fact that “neither the FTC guides nor the California statute directly creates a private cause of action”).
We are not aware of any criminal prosecutions leading to imprisonment under these sections, though this law is still relatively young.
Failure to comply with the prohibitions in Cal. Pub. Resource Code § 42355.51 could result in the imposition by a city, county, or the state of civil liability in the amount of $500 for the first violation, $1,000 for the second violation, and $2,000 for the third and any subsequent violation. (Cal. Pub. Resource Code § 42358).
Greenwashing: Possible Risk Reduction Steps
Historically, the risks associated with recyclability claims have been relatively low, as evidenced by the limited case law available on this topic. However, the potential penalties and liabilities for violations of the FTC Act, state laws such as California S.B. 343 requirements, and other prohibitions related to recyclability claims could become substantial. And despite a growing industry of companies that offer outsourced determinations on the recyclability of products, the outsourcing of such determinations does not, in general, negate fashion brands’ risks of potential liability under these laws.
Therefore, when also considering the increasing trend for consumer litigation targeting recyclability claims, it becomes increasingly important for fashion brands to take affirmative steps to ensure any recyclability claims made are accurate, even when outsourcing such determinations to entities that specialize in making them. Fashion brands should also consider whether any recyclability claims made on their products or packaging could be misinterpreted or misconstrued and provide qualifications to clarify the recyclability of the products/packaging where necessary. Err on the side of caution.
A recyclability and advertising compliance program can help fashion brands limit the risks associated with marketing the recyclability of their products and packaging. Putting processes and procedures in place to ensure all products and packaging are assessed for recyclability when first introduced as well as to reevaluate those claims when changes are made to the products and packaging, or applicable law, can reduce risks of potential liability. In addition to putting in place such compliance programs, fashion brands industry can reduce the risk of potential liability by …
> Documenting the basis for asserting recyclability claims, or if outsourcing such determinations, requesting documentation to support the determination that the packaging/product is recyclable;
> Independently assessing the voracity of any outsourced recyclability determinations;
> Documenting and maintaining records as required by Cal. Bus. & Prof. Code § 17580(a), if doing business and asserting recyclability claims in California; and
> Implementing compliance processes and procedures to reassess the recyclability of all packaging and products at least every five years, upon CalRecycle’s publishing of the Material Characterization Study. (See, e.g. Dec. 2023 S.B. 343 Material Characterization Study).
Laura Ganoza, Erik Swanholt, Rob Weisbein, Roma Lopes, and Megan Chester are attorneys with Foley & Lardner LLP.
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