FTC Announces Actions Against Kmart, Tender and Dyna-E Alleging Deceptive 'Biodegradable' Claims

The FTC has charged Kmart Corp., Tender Corp., and Dyna-E International with making false and unsubstantiated claims that their paper products were “biodegradable.” Kmart and Tender have agreed to settle the cases against them; the case against Dyna-E will be litigated. The FTC announced the cases today in testimony before the U.S. House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce. The testimony states that with the recent growth in “green” advertising and product lines, the agency will continue its efforts to ensure that environmental marketing is truthful, substantiated, and not confusing to consumers.

Administrative Complaints Against Kmart, Tender, and Dyna-E for “Biodegradable” Claims. In the three complaints announced today, the FTC charged retailers with making deceptive and unsubstantiated biodegradability claims: Kmart Corp. called its American Fare brand disposable plates biodegradable, Tender Corp. called its Fresh Bath-brand moist wipes biodegradable, and Dyna-E International called its Lightload brand compressed dry towels biodegradable.

Since 1992, the FTC’s “Green Guides” have advised marketers that unqualified biodegradable claims are acceptable only if they have scientific evidence that their product will completely decompose within a reasonably short period of time under customary methods of disposal. In the three complaints announced today, the FTC alleged that the defendants’ products typically are disposed in landfills, incinerators, or recycling facilities, where it is impossible for waste to biodegrade within a reasonably short time.

Kmart and Tender have agreed to orders that bar them from making deceptive “degradable” product claims and require them to have competent and reliable evidence to support environmental product claims. The settlement with Tender also requires it to disclose clearly whether any biodegradable claim applies to the product, the packaging, or component of either. Both settlements contain record-keeping and reporting provisions to assist the FTC in monitoring the companies’ compliance. The third matter, against Dyna-E and its owner, George Wheeler, will proceed in administrative litigation.

Testimony Before Congress on Deceptive Environmental Claims. According to the testimony presented by James A. Kohm, Associate Director of the Enforcement Division in the FTC’s Bureau of Consumer Protection, the Commission does not set environmental standards or policy, but rather protects consumers from unfair or deceptive practices. To achieve this goal in the environmental arena, the FTC issues rules and guides for businesses, publishes materials to help consumers make informed purchasing decisions, and challenges fraudulent and deceptive advertising through law enforcement actions, such as the three biodegradability cases announced today.

The FTC’s Guides for the Use of Environmental Marketing Claims (Green Guides) are the centerpiece of the agency’s environmental marketing efforts, according to the testimony. The Green Guides help marketers avoid making false or misleading green claims by explaining how consumers understand commonly used terms, such as “biodegradable” and “recyclable,” and by describing the basic elements needed to substantiate those claims. As part of the FTC’s current review of the Green Guides, the agency has held a series of workshops and plans to study consumers’ understanding of particular claims, such as “sustainable” and “carbon neutral,” which were not common when the FTC last updated its Guides.

The testimony also noted that the Commission recently completed a rulemaking proceeding to improve the usefulness of the EnergyGuide Label, which helps consumers comparison shop for energy-efficient appliances. In addition, the FTC is reviewing the effectiveness of its required lighting disclosures in helping consumers understand newer, high-efficiency compact fluorescent and LED bulbs.

In addition, the testimony stated that the Commission creates and distributes materials to help consumers make informed purchasing decisions about “green” products and avoid energy-saving scams. For example, the agency’s interactive Web site, “Saving Starts @ Home” (www.ftc.gov/energysavings), offers tips to help consumers conserve energy and save money in almost every room of their homes. At www.ftc.gov/savegas, consumers can find bumper-to-bumper tips for improving the fuel efficiency of their cars.

The Commission votes to approve the Commission testimony, to approve the two administrative complaints and proposed settlement agreements, and to issue the administrative complaint, were 4-0. The FTC will publish an announcement regarding the two consent agreements in the Federal Register shortly. The two agreements will be subject to public comment for 30 days, beginning today and continuing through July 9, 2009, after which the Commission will decide whether to make them final. To file a public comment on either of the two consent agreements, please click on one of the following two hyperlinks -- http://www.ftc.gov/os/2009/06/0823186publiccomment.pdf or http://www.ftc.gov/os/2009/06/0823188publiccomment.pdf -- and follow the instructions at that site.

NOTE: The Commission issues or files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the named parties have violated the law.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $16,000.

Copies of the complaint, the proposed settlement agreement, and an analysis of the agreement to aid in public comment are available from both the FTC’s Web site at http://www.ftc.gov, and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File Nos. 082-3186, 082-3187, and 082-3188)
(GreenGuidesKmart)