Washing Away Deceptive Business Practices

It has been said that environmentalist Jay Westerveld in a 1986 essay first popularized the term “greenwashing,” where he criticized hotels for placing placards promoting reuse of towels to "save the environment" while neglecting more substantive environmental policies. More recently, greenwashing has become increasingly prominent in discussions not just about environmental responsibility and consumer product claims, but corporate ethics and consumer choice. 

Clearly, Westerveld was on to something as greenwashing is an ongoing concern for consumers, businesses, courts, federal agencies, and industry self-regulatory bodies such as our own.

As the greenwashing term itself has morphed, it has spawned derivatives ranging from “AI washing” to “carewashing” to “healthwashing.” The washing concept also now includes “pinkwashing,”  “socialwashing, ”purplewashing,” “artwashing,” and “bluewashing,” among others.  

At the core of greenwashing is the deceptive practice of companies conveying a false impression or providing misleading information about their environmental practices or the sustainability of their products. This practice is the result of a misguided attempt to exploit the growing consumer preference for environmentally friendly practices, aiming to enhance corporate image and marketability but without substantial commitment to genuine sustainability efforts.

For instance, companies might use vague or unverifiable claims such as "eco-friendly" or "natural," without providing specific evidence or third-party certifications to support these assertions or otherwise claiming to be on track to reduce a company’s polluting emissions to net zero when no credible plan is in place.

The prevalence of greenwashing has led to legal challenges aimed at curbing deceptive advertising practices and spurred the Federal Trade Commission (FTC) to create its own “Green Guides,” first issued in 1992. Since then, the FTC updated its guidelines to more clearly define what constitutes deceptive environmental marketing claims. Now the FTC is preparing to issue its latest update to the Green Guides, scheduled for release later in 2024. 

The new terms that greenwashing has inspired address deceptive practices in specific areas. These terms generally follow the pattern of attaching "washing" to the prefix related to the area of concern.

AI Washing

With the rapid advancement of generative artificial intelligence (AI), concerns have arisen about companies exaggerating the capabilities or ethical standards of their AI technologies. AI washing refers to the practice of overstating AI's capabilities or the ethical rigor of AI systems without sufficient evidence or transparency. As Bernard Marr recently wrote for Forbes, “AI washing is like painting ‘go-faster’ stripes on a car without upgrading the engine, allowing marketers to capitalize on the excitement around AI while not offering anything that’s genuinely revolutionary.” 

Federal agencies are taking “AI washing” seriously. For instance, in March 2024, the Securities and Exchange Commission (SEC) announced settled charges against two investment advisers, Delphia (USA) Inc. and Global Predictions Inc., for making false and misleading statements about their purported use of AI. The firms agreed to settle the SEC’s charges and pay $400,000 in total civil penalties. Said SEC Chair Gary Gensler, “Investment advisers should not mislead the public by saying they are using an AI model when they are not. Such AI washing hurts investors.” The SEC also filed a case in June against the founder of an AI hiring and recruitment startup. 

Similarly, the Equal Employment Opportunity Commission (EEOC) is also concerned with vendor technology in AI and hiring. The EEOC has recently filed an amicus brief in Mobley v. Workday, Inc. supporting plaintiff’s motion to dismiss suggesting that the developer of an AI resume-screening tool is an “employment agency” or agent subject to liability under Title VII of the Civil Rights Act. The federal district court recently let certain claims move forward.

Our National Advertising Division is starting to examine AI claims made in various industry sectors, with a telecom case being one of the most recent examples. And in April, our Children’s Advertising Review Unit issued a compliance warning regarding the use of AI in online advertising and data collection practices directed to children. 

Carewashing

Post-pandemic many organizations are working on how to support their employee wellness with mixed results. A 2024 Gallup survey indicates that the percentage of employees who strongly agree that their organization cares about their overall well-being has plunged from 49% in 2020 to 25% in 2024. 

“Carewashing” refers to companies promoting themselves as caring for their employees or communities through various initiatives while simultaneously engaging in practices that undermine these claims. This term also highlights discrepancies between corporate rhetoric and actual practices regarding employee engagement and community outreach. 

As a recent Harvard Business Review article observed, “Too many organizations with unsustainable “work hard, play hard” cultures believe that checking the well-being box by offering mindfulness training or yoga classes qualifies them as having a positive and safe culture when, in fact, they’re merely “carewashing.”

Healthwashing

Sometimes in the food and beverage industry products are marketed as healthy, natural, or nutritious despite containing ingredients that may be harmful or lacking in genuine health benefits or merely making claims of general well-being from the consumption of a nutrient or dietary ingredient and how it is intended to help your body. This practice, sometimes referred to as “healthwashing,” takes advantage of consumer health consciousness by presenting products in a favorable light without adequate substantiation.

What Westerveld began with his 1986 essay on hotel towel-washing practices, has now expanded to various forms of "washing" across different sectors, reflecting a broad concern about corporate transparency and accountability. While these terms serve to expose deceptive practices and encourage responsible behavior, they also underscore the importance of scrutinizing claims made by companies and supporting soft law and hard law measures that enforce truth in advertising. 

Whether it is environmental sustainability, technological advancements, corporate social responsibility, or public health, vigilance against misleading claims is an essential component of enhancing consumer trust.

Originally published in Forbes