Date 9 September 2008
Research commissioned by the Advertising Standards Authority (“the ASA”) reveals that there is a confusion and lack of understanding amongst consumers as to what ethical and environmental claims made about a product really mean. It is perhaps not surprisingly then that there has been a large increase in the number of complaints received by the ASA about environmental claims made in advertising campaigns – up from 117 complaints about 85 ads in 2006 to 561 complaints about 410 ads in 2007. With consumers tightening their belts as the credit crunch continues to bite and consumer spending on the decline, many consumers are dropping green products for more economic alternatives. A consumer who therefore bucks this trend and makes a purchase based on green claims is likely to be all the more dissatisfied if those green claims turn out to be unfounded or exaggerated.
The ASA takes a tough line on green claims as the following cases demonstrate:
Shell placed an advertisement in which it claimed that “we use our waste CO2 to grow flowers”. In fact, only 0.325% of its emissions were used to grow flowers. The ASA found that this advert was misleading because it implied that Shell used all of its waste CO2 to grow flowers, which was not in fact the case.
Lexus published an advertisement which included the headline “High Performance, Low Emissions, Zero Guilt”. The advert also included text which clarified this claim. The ASA found that this text was not sufficiently prominent. It also decided that “zero guilt” went too far as it implied that the car caused little or no environmental damage. The advert was therefore judged to be misleading on both grounds.
Vectrix advertised that its scooter had “zero emissions” and was “environmentally friendly”. It based the zero emission claim on the scooter’s point of use as it had no engine and no exhaust, which it said was in line with practice within the transport industry. Despite this, the ASA still found that its claims were misleading as the majority of the scooter’s users would charge up the vehicle by using electricity from the national grid. The scooter was not therefore carbon neutral. Any claim that the product was therefore emission free or had zero emissions were therefore misleading.
The ASA found that the claim that the scooter was “environmentally friendly” was also likely to mislead the public. When looking at the entire lifecycle of the product, the “environmentally friendly” tag could only be used if no environmental damage would be caused. The manufacture and charging requirement of the scooter meant that it could not be labelled as being “environmentally friendly”.
The ASA therefore take an extremely rigorous approach when considering whether a seemingly green product really can boast those credentials. Practical tips to take when considering whether a claim to be green can be sustained include:
- Consider the language used – absolute claims (such as “100% recycled”) and phrases such as “carbon neutral”, “carbon zero” and “carbon negative” are most open to attack.
- Support any green claims with objective and verifiable evidence. Document this at the same time that you are putting together your campaign.
- Check whether any statement made may inadvertently imply that a product is environmentally friendly – if it does, this will also need to be capable of objective verification.
- Qualify the green claim to ensure that the advertising does not mislead. This is particularly the case for claims such as “environmentally friendly” or “wholly biodegradeable” which should only be used without qualification if no environmental damage will be caused when the entire life cycle of the product is taken into consideration.
- If scientific opinion is divided or evidence is inconclusive, qualify the claim made.
The Consumer Protection from Unfair Trading Regulations 2008 (“the Regulations”)
Aside from falling foul of the ASA and the resulting reputational damage, another potential pitfall comes in the form of the Regulations which came into force on 26 May 2008.
The Regulations have a very wide ambit and aim to protect consumers from unfair commercial practices before, during and after a transaction. Advertising and marketing fall within the definition of a commercial practice.
Regulation 3 confers a general prohibition on unfair commercial practices. A commercial practice will be unfair if it:
- contravenes the requirements of professional diligence – which means that it falls below the standard of skill and care that a trader may reasonably be expected to exercise towards consumers in line with honest market practices or general good faith in that field; or
- materially distorts or is likely to distort the economic behaviour of the average consumer in relation to a product – in other words, if it impairs his ability to make an informed decision and causes him to make a decision that he would not otherwise have made.
Regulation 5 renders commercial practices unfair if they are misleading. A commercial practice will be misleading if it gives false information which deceives or is likely to deceive an average consumer and causes or is likely to cause him to take a decision that he would not otherwise have taken in relation to, amongst other things, the main characteristics of the product and any statements or symbols used to denote sponsorship or approval of the product.
If a product does not live up to its green credentials, this is likely to be an unfair commercial practice. A consumer may purchase one item over another because it makes claims to be green. Alternatively, he may purchase something that he would not otherwise have done (for example, a bicycle to travel to work on as he wishes to reduce his carbon footprint). If the product purchased turns out not to be green or not as green as it claims, the consumer may have purchased something that he would not have otherwise done and so the environmentally friendly claims would fall foul of both the general prohibition on unfair commercial practices (Regulation 3) and the prohibition on misleading consumers (Regulation 5).
Engaging in commercial practices which breach the Regulations is a criminal offence. If found guilty, the penalties range from a fine to a sentence of up to two years imprisonment. In the case of corporate defendants, a prosecution can also be brought against an officer of the company (which includes a director, manager, secretary or similar office or anyone purporting to act as such) if they consented or connived to the offence or it is attributable to any neglect on his part.
To be convicted of a breach of Regulation 3 (the general prohibition on unfair commercial practices), the prosecution must show that the trader knowingly or recklessly breached the requirements of professional diligence and that the practice materially distorts or is likely to distort the behaviour of the average consumer. However, liability for a breach of Regulation 5 is strict – in other words, the prosecution do not have to prove that there was any intent or recklessness on the part of the trader – just that the commercial practice was misleading. For that offence, it will however be a defence if the trader can show that the offence was due to a mistake, reliance on information supplied by another person (such as the manufacturer of an item if the trader is a retailer or wholesaler), the act or default of another person, an accident or another cause beyond his control and that he took all reasonable precautions and due diligence to avoid committing the offence.
So, prudent retailers should investigate thoroughly any claim that a product is green and be able to support such a claim with objective and independent verification. If need be, promotional material should be tempered down to ensure that the green credentials will stand up to scrutiny.
What rights does the consumer have?
The Regulations do not give consumers any right of action – instead, it imposes a duty on the Office of Fair Trading to take action to enforce the Regulations. Nor do they render void or unenforceable any contract that breaches the Regulations.
A consumer who complains that they have been misled into entering a contract as a result of a product’s green credentials may have a claim based on misrepresentation against the other party to that contract, which will usually be the retailer from whom they purchased the item. To succeed, the consumer will have to establish that:
- A statement of fact was made to them by the defendant before the contract was entered – for example, a claim in an advertisement that a product was carbon neutral;
- That statement was false – in the above example, if the true position was that the product was not in fact carbon neutral; and
- They relied upon the statement in entering the contract and that it induced them to do so (although it need not be the sole or the main reason for entering the contract).
If a misrepresentation claim is made out, the consumer can rescind the contract (in other words, treat the contract as if it never existed and so hand back the item purchased and reclaim the purchase price) and, if the misrepresentation was made fraudulently or negligently, claim damages for any loss that he has suffered as a result. If the misrepresentation was made innocently, then the Court has a discretion to award damages in lieu of recission but a consumer cannot in those circumstances both rescind the contract and claim damages.
An aggrieved consumer may also be able to rely on the Sale of Goods Act 1979 which implies into every contract for the sale of goods that they will be of satisfactory quality. Where the parties to the contract are a business seller and a consumer purchaser, the Sale and Supply of Goods to Consumers Regulations 2002 enable a Court to use public statements made by the seller or manufacturer about a product when determining if it is of satisfactory quality. Advertisements extolling the product’s green credentials can therefore be taken into account when deciding if the product was of satisfactory quality.
A legal minefield therefore awaits the unwary. The development of greener products is to be encouraged and retailers should quite rightly want to capitalise on their progress in this field. The environmental credentials of a product should be promoted but in a way which does not exaggerate or use unqualified language which is likely to cause confusion to the average consumer.
If you require any further information or assistance with any of the issues featured in this article, please contact Clare MacKay on 01727 798093 or at clare.mackay@salaw.com
© SA LAW 2008
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual cases.