Home Innovation Insights

Michelle Foster
October 4, 2012

Got Third-Party Certification?

This week the Federal Trade Commission (FTC) issued revised “Green Guides” designed to help marketers ensure that the product claims they make to consumers about environmental attributes are truthful and non-deceptive. The use of third-party certifications has become a significant green marketing trend, and it’s no wonder why. Cone LLC, a global public relations and marketing firm, affirms that consumers rely on certifications when evaluating environmental claims. Cone’s opinion survey found that when purchasing a product with an environmental benefit, a whopping 81% of consumers cited a symbol or certification as most influential in their decision to buy.

Overwhelmingly, consumers are looking for a certification to help them make their purchasing decisions. But not all certifications are created equal. Some are awarded as the result of stringent independent, third-party review and analysis. Others are merely eye-catching logos developed internally to company-specific criteria. The combination of widespread use of certification seals and logos along with the potential for consumer confusion spurred the FTC to propose more specific guidance than ever before in its newly revised Green Guides.

The FTC guidance on certifications is notable. It determined there were three categories which defined a given certification’s credibility and dependability. Based on my review of the Green Guides, I would summarize the FTC’s certification categories as follows:

First-party Certification

This type of certification is essentially a self-certification. This is when a marketer uses any seal-of-approval, logo, or certification mark that does not have the backing of an independent, third-party evaluation. The FTC deemed such an unqualified claim would be deceptive because consumers would assume that an independent, third-party certifier evaluated the product by virtue of the mark being displayed. The FTC advised that to avoid deception marketers should use clear and prominent qualifying language to alert consumers that the certification program was internally-created.

Within our industry, a number of builders have created their own criteria to promote their homes as green or energy efficient because they meet their self-defined criteria. According to the Green Guides, I suspect the FTC would find that marketing practice potentially deceptive unless it was very clear that it was based on criteria defined by the builder, and that the certification refers only to very specific and limited benefits.

Second-party Certification

This type of certification is one granted by a membership organization where the certification applicant is a dues-paying member. The FTC opined that the use of this type of seal/logo/certification could be deceptive if the certification seems to convey that it was awarded by an independent certifier, as opposed to a membership/trade association. As a result, to avoid deception the FTC recommends the seal should be accompanied with clear and prominent language disclosing the material connection between the company using it and the organization that bestowed it.

To relate to our industry, builders marketing their homes as green by virtue of a certification issued by an organization to which they pay dues or from an industry trade association through which they are a member should use clear and prominent language so that consumers understand the source and basis of the certification. The FTC also asserted that an advertisement for a product that includes text, a seal, or a logo that indicates the marketer/builder is a member of an “Eco-Friendly Building Association,” for example, would also be deceptive without language to make it clear that the products (homes) themselves were not evaluated.

Third-party Certification

The FTC determined that certifications from an independent, third-party organization, using standards widely recognized by industry, were not inherently deceptive. Accordingly, for builders and developers looking to promote their properties as “green,” true independent, third-party certifications are considered reliable, credible, and transparent for consumers looking for affirmation of the builder’s green claims about his/her homes. The FTC recommended that marketers should accompany these types of certification seals with clear and prominent language conveying that the certification refers only to specific and limited benefits. Further, the FTC suggested that marketers use a website to provide greater details on which environmental attributes were evaluated.

In light of this new guidance, it may be heartening to know that Home Innovation Research Labs is a full-service consulting, product testing, and accredited third-party agency dedicated solely to issues related to the home building industry. While we are a subsidiary of a trade association, NAHB, we are completely independent and they have no operational control over our business. We don’t have members, we have clients, and none of our services are limited by any type of membership or lack thereof. In terms of green homes, we deliver a rigorous green certification program based on the only ANSI-approved residential green building rating system – the ICC 700 National Green Building Standard (NGBS) – which is a practical and affordable option for all builders, developers, and remodelers. You build a green home in compliance with the NGBS and follow our program rules, we’ll provide our green certification so your homebuyers or renters can know that your green claims are more than just lip service; they’re backed by an accredited third-party certification agency with nearly 50 years of experience in the home building industry.

Although you might not be worried about the FTC taking enforcement action directly against you as a builder, it is still a smart and sustainable business strategy to be sure you don’t mislead your potential customers. The Cone, LLC, survey noted above found that 75% of consumers would boycott a company if they felt its environmental claims were misleading. Don’t put yourself in that situation. Build great green homes and strong consumer goodwill by certifying your green homes through the Home Innovation’s program based on the National Green Building Standard.

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