Markets Wired

A retailer of rayon towels will be barred from making false claims that mislead consumers into thinking that its products are “biodegradable,” under a proposed settlement with the Federal Trade Commission.

The settlement with Dyna-E International and its owner George Wheeler resolves the third administrative complaint the Commission issued earlier this year against companies that made false biodegradability claims. The Dyna-E International complaint charged the company with making false claims that its Lightload brand compressed dry towels are biodegradable.

In June, the FTC settled similar cases against Kmart Corp. and Tender Corp., as part of a broad effort to ensure that environmental marketing is truthful and based on solid evidence. Since 1992, the FTC’s “Green Guides” have advised marketers that to make unqualified biodegradable claims, they must have scientific evidence that their product will completely decompose within a reasonably short period of time under customary methods of disposal. In all three complaints, the FTC alleged that the companies’ products typically are disposed in landfills, incinerators, or recycling facilities, where it is impossible for these products to biodegrade within a reasonably short time.

Like Kmart and Tender, Dyna-E and Wheeler will be barred from making deceptive “biodegradable” product claims and required to support all other environmental product claims with competent and reliable evidence.

The Commission vote to approve the settlement agreement was 4-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through September 25, 2009, after which the Commission will decide whether to make it final. To file a public comment, please click on the following link: http://www.ftc.gov/os/2009/08/D09336publiccomment.pdf and follow the instructions at that site.

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 Docket No. D09336)
(Dyna-E)